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Impact of the Macro-environment on Vodafone

University: UK College of Business and Computing

  • Unit No: 9
  • Level: Undergraduate/College
  • Pages 6 / Words 3500
  • Paper Type: Assignment
  • Course Code: L/508/2319
  • Downloads: 0
Answer :
Organization Selected : Vodafone

INTRODUCTION

Business techniques assume the exceptionally essential part of being developed and developing any business association. It is very important that the correct sort of methodologies is encircled, with the goal that thick development can be accomplished and the organization can contend adequately in the market (Garcia-Castro and Aguilera, 2014). There are constantly level present these systems which are spared by individuals sitting in various positions in an association, for instance, CEO and overseeing executives are in charge of encircling long haul techniques for the association, then again, the general chief is in charge of actualizing those methodologies in a viable way. After these individuals, the part of subordinates and workers will come. Hence it can be said that the right kind of business strategy will have various strategies for the company as well as customers in general. Vodafone is the leading telecommunication company in the UK and is having business operations around the world as well. The company is well established and is having a net operating income of around 4 billion pounds. It is having 1,12,000 employees around the world working within the company. This report will have a detailed discussion on the business strategy followed by the company for the purpose of operating its business effectively in the marketplace.

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TASK 1

P1 The impact and influence of the Macro-environment on Vodafone and its business strategies

There is a direct bearing of the macro environment on overall working of company and it influence the decision making as well as business strategy of company. Because of the fact that Vodafone is a big company which is operation in various countries it gets affected by the working macro environment that prevails in those countries and thus it is highly essential that company get acquainted with the working environment of that particular country so that growth of business and customer satisfaction can be achieved (Ghezzi, Cortimiglia and Frank, 2015). There are some ways through which the Macro environment of a company can be analysed; these ways can be, a macro analysis of environment through PESTLE etc.

PESTLE Analysis of Vodafone

Political

Political factor is one of the full scale factors which assume essential part to create media transmission working business in any nation. It might incorporate from the administration authorizing process, lawful issues, control and so forth to different weight of weight gathering. These elements assume fundamental part to assemble foundation for any system working industry. This factor includes the political class of a country, the political parties their ideologies etc. If a country would be having a political ideology which would be based on socialism then certainly the ease of doing business in those countries will be affected because of excessive government regulations and control on the resources. One of the important political mayhem faced by Vodafone was in India in which the country’s government has put retrospective taxation on company and this has affected the business operations of company. Later on, company took the case to apex court of the country and gets the same in its favour.

Economical

The rates of monetary development, swelling, wage dissemination process and so on are the conservative components which additionally impact the development of media transmission and communication system. Increasing pay or increment in power of individuals to make a purchase which may increment in the use of Vodafone. Additionally falling costs of handset could influence the market of Vodafone. Ascending in media transmission thickness is likewise challenge. It refers to the economic condition of a country and what are the benefits as well as drawbacks which can be seen by company in operating in that country based on its economic condition (Lundan, 2012). It plays a very crucial role in deciding whether to operate in a particular country or not. The rising level of income of middle and upper middle class has created opportunity for companies like Vodafone to grab opportunities and grow its business effectively as well as efficiently.

Social

It refers to the social structure of the country and its market in which the company is operating. People around the world is using telecommunication as a tool to communicate with each other, the language, cultural, and preference barrier has no bearing on the consumption of overall growth of the telecommunication business and is growing rapidly, therefore the opportunities for Vodafone is plenty.

Technological

Keeping in mind the end goal to take care of the consistently developing demand for web based telecom services around the world, organization is making vital plans to go into 5G and implement the same through all its networks at least possible cost for both company and consumers. This can be achieved by the company by making substantial interests in its mechanical up degree and additional R&D Investments.

Legal

It refers to the legal rules and regulation that affects the telecom industry around the world. Some of the regulations which are framed by the telecom regulators of the concerned country that are necessary to be abide by the company. Some of these regulations are on call drop illegal data mining by telecom companies of its customers. Vodafone ensures that such legal issues does not haunt company’s growth or future in any way by having a separate cell in its organisation which takes care of all the aspect of legality (Lusch and Vargo, 2014).

Environmental

This means that company shall operate its business in such a way that it does not harm the environment both natural and social in any way and contributes positively within the same. Vodafone is committed to reduce its carbon emission to 40% by 2022.

Ansoff Matrix of Vodafone

Ansoff Matrix concentrates the brain on how every open door fits with the business methodology regarding items and markets. It is easy to utilize and exceptionally powerful in driving clear vital reasoning around development. It takes a shot at the premise that to convey development an organization must choose how and where it needs to contend: in present or new markets and through existing or new items.

  • Market Penetration (Present market with present product): Vodafone believes in increasing market penetration of its products by excessive campaigning and higher advertisements which will increase the customer base of company. In countries like India the company has launched various campaigns which are funded with lot of money in order to increase its market penetration and compete effectively in a higher competitive market.
  • Market development (New Market with Current product): Under this type of strategy the company will aim to enter into new markets but with the same product line and portfolio, this enable company to grow as well as develop without incurring any extra cost. Vodafone has entered in the market of India and other Asian countries with existing service portfolios.
  • Product development (Present Market with New Product): This strategy is adopted by the company when it wants to increase its current market share and reach, It will try to bring new and innovative products as well as services to persuade more customer segments. Vodafone is continuously making necessary changes in its product and service portfolio to capture a higher market share and compete effectively within the market.
  • Diversification (New market with New Product): In this kind of strategy the company will venture into new market with a completely new kind of product to grab consumers. This strategy is usually adopted by companies when it wants to diversify and grow beyond current markets and boundaries. Vodafone is consistently following this kind of strategy by venturing into different countries, having different market structure and composition (Neugebauer, Figge and Hahn, 2016).

TASK 2

P2 Assessment of Vodafone’s Internal Environment and Capabilities

It is very necessary that right kind of analysis of internal environment is done so that overall business growth can be achieved. A company can frame its business strategies effectively if it would be aware of its various kinds of strengths as well as weaknesses.

Meaning of Strategic Capabilities

This means the capabilities of an organisation to create a long term competitive advantage for itself for a longer period of time. A company can gain long term competitive edge by having best in class resources, processes, products and services which will distinguish the company from its other competitors. Vodafone can attain competitive edge by focusing on its service delivery, quality management etc. over period of time.

VRIO Framework of Vodafone

For the purpose of a specific end goal to comprehend the wellsprings of upper hand firms are utilizing numerous apparatuses to examine their outer (Porter's 5 Forces, PEST investigation) and inside (Value Chain examination, BCG Matrix) situations. One of such instruments that break down company's inward assets is VRIO investigation. The device was initially created by Barney, J. B. (1991) in his work 'Firm Resources and Sustained Competitive Advantage', where the creator recognized four qualities that company's assets must have with a specific end goal to wind up a wellspring of maintained upper hand. As indicated by him, the assets must be valuable, rare, costly to imitate and whether firm is organise to have the all the value of resources (Laudon and Traver, 2013). The primary inquiry of the structure inquires as to whether an asset includes an incentive by empowering a firm to abuse openings or safeguard against dangers. On the off chance that the appropriate response is yes, at that point an asset is viewed as Valuable. Assets are likewise profitable in the event that they enable associations to expand the apparent client to esteem. This is finished by expanding separation or/and diminishing the cost of the item.

Capital Access

Vodafone UK has been able to get the necessary capital from its parent company Vodafone in a very easy and effective way. Vodafone is having a free cash flow of more than 6 billion pound which makes it easy for Vodafone UK to have access to capital for business expansion and operations.

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Network Capability

The company has focused much on their network capabilities which has resulted in higher speed and excellent indoor as well as outdoor coverage. The company is having high spectrum over its competitors. Its low frequency signals of 4G enable faster level of internet speed for customers (Alstete, 2014).

Brand Equity

According to recent survey of time magazine, Vodafone has came on 8thspot in terms of most valuable brand in the world. The valuation of company’s brand value has come up to $45 billion. Vodafone’s UK division has been able to benefit a lot from this Brand value.

Resources as well as Capabilities

Valuable

Rare

Costly to imitate

Organised to Exploit

Impact on overall competitive advantage

Access to Capital

YES

NO

NO

NO

A Realised competitive advantage for the company.

Network Capability

YES

YES

NO

NO

Temporary competitive advantage

Brand Equity

YES

YES

YES

YES

A sustained competitive advantage

Internal Strength and Weakness of Vodafone

There are various strengths as well as weaknesses of the company which can be laid down as follows:

Strengths

  • Dominance in Cellular market, which gives company a competitive edge over the others.
  • Wide geographical Presence.
  • Diversified geographical portfolio, with presence in US, ASIA, Africa, Middle East etc.
  • Strong Network Infrastructure.
  • Ability to adapt with the market condition and this is the reason that company has not faced many cultural and economic problems in establishing itself within various countries (Jensen and Berg, 2012).

Weakness

  • Low Research and development
  • Negative Return on Assets (ROA)
  • No network in rural areas as the company is not able to penetrate that much.
  • Tax issues faced by company around the world.

TASK 3

P3 Analysis of competitiveness of telecommunication sector of UK through porter five forces model

Porter five forces model is an effective tool to analyse the competitive strength of any organisation or industry. The analysis of telecom industry of UK can be Made through this tool and is as follows:

Threat of New Entrant

It refers to the threat that a competitor may come in the market and grab market share from existing players operating within the industry. The threat of new entrant within the telecom industry of UK is quite large because of the fact that there is still very good potential left within the sector and necessary growth as well as profitability can be achieved by players. However there are some factors which can lower the extent of this threat and these are

  • Huge capital investment required to setup any telecom business within the industry.
  • Economies of scale give benefits to existing players.
  • Customer Loyalty of present Organisations are quite good and thus it is unlikely that they will switch.

Bargaining power of Suppliers

The suppliers are present within the telecom industry of country in the form of infrastructure provider to telecom companies for the purpose of providing telecom services. Mobile manufacturers are also the suppliers of industry and those are present in quite a huge number, therefore suppliers bargaining power is quite moderate within the sector (Sia, Soh and Weill, 2016).

Competitive Rivalry

It refers to the competition among existing players. The level of competition is quite high among existing players and they follow pricing as well as non- pricing strategies to overcome competition and to gain competitive advantage. Companies spend huge amount on their advertising and promotion budgets which is a clear indicator of the level of rivalry the companies are having in between them. The spending on Research and development is also quite huge and this also indicates the level of rivalry within industry. There are various telecom players within UK and is having capabilities to give competition to each other through various resources that they have (Leonidou and et.al., 2015). Get the best assignment writing service with chat support.

Threat of substitute

It implies the peril that a contender may bring certain things or organizations which may substitute the present thing or organization of the association and thusly may achieve the loss of customers, a bit of the general business and also profitability of the association. The products and services offered by the companies within the sector are quite similar and therefore the scope for substitute is even more within the industry, thus it is quite essential for all the companies within sector including Vodafone to make necessary changes within their product and service portfolios to gain competitive advantage and to make their products something which are not substitutable.

Bargaining power of Buyers

The number of consumers and buyers of telecom industry is very huge and scattered and moreover this industry has become a necessity now for people, therefore buyer’s bargaining power is negligible within the sector (San Martin-Reyna and Duran-Encalada, 2012). However they do have too much option within the industry, if they are not satisfied with products or services they can switch to other company, therefore the switching cost is very low for consumers. It is along these lines fundamental that administration of Vodafone might ensure that the level of nature of its items would not break down and benefit conveyance should be better than expected, the main there is a degree that a purchaser would remain steadfast with organization and would not search for different organizations to make its buys.

TASK 4

P4 Strategic Direction and Options available for Vodafone

Bowman's Strategy Clock is a model utilized by an organization while planning promoting system to examine its aggressive position in contrast with the contributions of contenders. It is a diagrammatic portrayal which demonstrates connection between client esteem and cost

Figure 1: Bowman's Strategy clock model

Following can be the eight strategic positions that Vodafone can adopt in order to enhance its competitive position are as follows:

  • Low price Value:This is a section particular alternative and organizations don't more often than not contend in this class. This is the "clearance room" and numerous organizations would prefer not to be in this position. Organizations pick this position when their item needs separated esteem. An organization can apply this through cost successfully offering volume, and by consistently pulling in new and potential clients. Vodafone do not compete in this category as the prices of its products as well as services are usually high as compared to its competitors.
  • Low Price:A Company can choose this alternative for their items or administrations when it will be minimal effort pioneers. At the point when an organization will work under this system (low costs) its overall revenue will turn out to be low so organization need to deal high volume. In the event that an organization which is ease pioneer has sufficiently extensive volume or solid vital explanations behind its position, it can manage this approach and turn into an intense power in the market (Muduli, 2012). Vodafone is a company with a good brand value therefore it is easier for company to charger a higher price instead of low price, therefore company would not opt this strategy more often.
  • Hybrid (Moderate prices and Moderate differentiation):Hybrid are those intriguing organizations which offer items or administrations to its clients at a low cost, yet offer items or administrations with a higher saw an incentive than its other ease rivals. In this methodology volume is an issue however organizations assemble a notoriety of offering reasonable costs for sensible products and enterprises.
  • Differentiation:In differentiation an organization grows such items and administrations which offer extraordinary characteristics that are esteemed by clients. At the point when an organization creates and plans such items and administrations which separate (high saw esteem) it from contenders it generally got an aggressive edge. Marking assume a key part in separation techniques as it enables an organization to wind up synonymous with quality and also a value point.
  • Focused Differentiation:In Focused Differentiation organizations items offers high apparent esteem items against high costs. This technique embraced by those organizations whose clients purchase items or administrations in light of apparent esteem alone (Ritchie, 2013). It isn't essential that items have any genuine esteem, yet the view of significant worth by the clients is sufficient to charge extensive premiums. This kind of strategy does not have much relevance in telecom industry because the prices and costs of services provided by companies are usually competitive unlike the prices in this strategy.
  • Increased price and Standard product:In some cases an organization takes a risk and basically expands their costs with no expansion to the esteem side of the condition (no highlights and development in Product as well as services). On the off chance that the cost increment is acknowledged by client, organization will appreciate higher productivity and in the event that it isn't, their offer of the market fall, until the point that organization make an acclimation to their cost or esteem (McGrath, 2013). This system can't work in long haul suggestion as an unjustified value premium will soon be found in a focused market.
  • High price\ Low value:This technique can be executed in a market where just a single organization offers the products or administration (imposing business model valuing). As a monopolist, organization don't need to be exceedingly worried about including an incentive in their item or administrations in light of the fact that, if clients require what organization offer, they will pay the value organization set. Vodafone cannot use this strategy for the purpose of doing its business operations as it is not the only player within the telecom industry of UK.
  • Low value\ Standard price:If a company is having a low value product, the only way it can sell its products is through lowering the overall prices for its products, if it keeps the prices at the same level it will surely lose market share in the long run. Hence, If Vodafone opts for this kind of strategy; it will have to keep the prices of its products also very low (Ireland, Hoskisson and Hitt, 2012).

CONCLUSION

In this way, one might say that business strategy is an exceptionally Essential piece of any business. It sets purposes, bearings, goals for the association and furthermore outlines rules so as to accomplish the set destinations and targets. It is likewise very critical that these techniques are actualized in successful way with the goal that organization can accomplish upper hand and business development in the more drawn out timeframe. There are different apparatuses which procedures can be confined inside an association, for instance, PESTLE examination and SWOT investigation which allows the organization to survey interior qualities and shortcomings with outside circumstances and dangers and thusly it enables the organization to strategise effectively for the advancement of organization and its partners. It is likewise important to remember the impact of these components on the organization and it’s working so a proactive as well as enhanced approach towards these variables can be connected over period of time. In the current era of competition it is very necessary that right kind of policies and business strategies are framed to retain and increase the customer base of organisation along with maintaining necessary profitability and growth.

REFERENCES

  • Garcia-Castro, R. and Aguilera, R.V., 2014. Family involvement in business and financial performance: A set-theoretic cross-national inquiry. Journal of Family Business Strategy. 5(1). pp.85-96.
  • Ghezzi, A., Cortimiglia, M.N. and Frank, A.G., 2015. Strategy and business model design in dynamic telecommunications industries: A study on Italian mobile network operators. Technological Forecasting and Social Change. 90. pp.346-354.
  • Lundan, S.M., 2012. The new eclectic paradigm and international business strategy. Handbook of research on international strategic management. pp.64-76.
  • Lusch, R.F. and Vargo, S.L., 2014. The service-dominant logic of marketing: Dialog, debate, and directions. Routledge.
  • Neugebauer, F., Figge, F. and Hahn, T., 2016. Planned or emergent strategy making? Exploring the formation of corporate sustainability strategies. Business strategy and the environment. 25(5). pp.323-336.
  • Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson.
  • Alstete, J.W., 2014. Strategy choices of potential entrepreneurs. Journal of Education for Business. 89(2). pp.77-83.
  • Jensen, J.C. and Berg, N., 2012. Determinants of traditional sustainability reporting versus integrated reporting. An institutionalist approach. Business Strategy and the Environment. 21(5). pp.299-316.
  • Leonidou, L.C. and et.al., 2015. Environmentally friendly export business strategy: Its determinants and effects on competitive advantage and performance. International Business Review. 24(5). pp.798-811.
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