United Kingdom is one of the largest consumer of the mobile devices and over the consecutive year number of users in the economy has been rising at a rapid rate showcasing importance of the mobile usage in their daily life. As per the Deloitte survey, it can be seen that more than 53% of mobile users ranging from 16 to 75 years of age utilise smartphones during walking and the figures gradually reaches to 74% marks if the UK mobile users of 15 to 24 is considered. Easy availability of the mobile telephony service has aided the growth of the mobile sale in the state and it has provided scope to the economy to earn a revenue of 3.8 billion euro retail revenue during the first quarter of 2017. However, as per the data of revenue generation during the first quarter of 2018, it can be seen that there has been reduction in the revenue of the telecom services in UK by 32 million euro, yet it shows an increase compared to the previous years. One of the main accelerator of the growth of the UK telecom services is the availability of the large number of the mobile network operators. For instance, there are more than 8 large network service provider in the UK that makes the market competitive enough so that the growth in the UK mobile industry has been facing rapid acceleration during the recent years. This report is aimed to provide an external environment as well as internal environment analysis too understand the performance of network service providers in the UK economy. Additionally this report is aimed to analyse the telecommunication sector of UK in order to understand and interpret the strategic direction for the same. For better understanding, this report will chose Vodafone UK, which will aid the researcher to analyse the desired objective of the report.
This section of the report is aimed to discuss the macro environmental analysis of the Vodafone UK. In order to do the same, external environmental analysis tool will be utilised, which will allow to determine the performance of the Vodafone UK from different perspective. External analysis will be done through utilising the PESTEL analysis that will allow to check the political, economic, social, technological, environmental and legal environment in which the selected organisation operates in UK market. Moving forward, the report will focus on the Ansoff Matrix analysis of Vodafone UK in order to understand and introduce the senior executive of the firm new strategies for the firm analysing the performance of the same.
Political environment:
One of the most important macroeconomic factor that determine the presence and the growth of the firm is the political environment in which the firm operates. When it comes to the Vodafone UK, then the firm has maintained well connection with the political influencers in order to enhance the business of the firm. In addition to this, in UK government regulation regarding telecom firm are stringent in nature due to the usage in spectrum and limitation of the frequency. In addition to this, Base Transmitter Stations (BTS) operates as per the governmental norms that keep the network operators under strict control. Thus Vodafone UK focuses to keep good relation while maintain the laws and the local regulations in order provide scope to grow its business.
Economic environment:
Economic environment of the firm is such a thing that determines the sustainability of the firm that makes it another essential factor for every firm to consider. Vodafone in the UK is the third largest network service provide that enjoy more than 21% market share showcasing the presence of the firm in the state. Additionally it has been seen that the broadband service of the Vodafone in the UK market has been rising at a rapid rate. During the first quarter of 2018, Vodafone has more than 316,000 consumers of broadband service that showcase good amount of demand for the service from the Vodafone in UK.
Social environment:
Social factors largely determine the growth and sustainability of a business because higher social acceptability provides good amount of aggregate demand to the firm; whereas, lack of social acceptability can reduce the demand leading the firm to exit market. Considering the market share and the amount of customers, it can be seen that the Vodafone in UK is accepted wholeheartedly by a large section of the consumers in the UK. With almost 444 million customers Vodafone enjoys good amount of social acceptability in the UK economy.
Technological environment:
Communication network is one of the field that requires high amount of technological knowhow without which firms cannot become large under the competitive market of UK. Considering the UK it can be seen that Vodafone has introduced 4G and other advanced technologies in the state during 2013 enabling the consumers enjoy internet at high speed. Affordable broadband service in the UK by Vodafone makes the firm one of the tech giant that aids the mobile consumers of the UK to utilise latest telephony technologies comparatively earlier than the other nations.
Environmental environment:
UK is one of the nations that follow strict environmental practice and clear direction regarding the Corporate Social Responsibilities (CSR)) defines the stringent environmental factor under which Vodafone operates. Following the recent endeavours of the Vodafone in order to keep their operations environmental friendly it has been seen that the firm operates as per the governmental directions. Adopting the phone recycling program and disposable of the mobile batteries at free of cost has provided the firm potential to maintain its environmental performance.
Legal environment:
Legal environment enables the firm to operate under such a scenario where it can either face development while keeping the operation aligned with the legal environment or can exit the market. When it comes to the UK, then the legal environment is strict regarding the telephony service because it has potentials to hamper the livelihood of the users. Under this scenario, government of UK follows strict policies to maintain Specific Absorption Ratio (SAR). Additionally mobile policies while driving are well established that enables the firm like Vodafone to keep operating under the stringent rule from the government.
Market development:
Vodafone is the third largest network service provider in the UK economy. As it can be seen that the out of total market share Vodafone UK enjoys 21% of the consumers that showcase the well acceptance of the firm in the domestic economy. Considering the growth path during the last one decade of the Vodafone UK, it can be seen that the firm has operated with great enthusiasm in order to become the largest network service provider in UK. With the strong presence in the urban areas, Vodafone has gained much amount of prominence in their service during the last one decade; however, the business largely depends upon the tier 1 and tier 2 cities that makes it one of the problematic scenario in front of the Vodafone UK.
Market penetration:
Vodafone was introduced in UK during 1982 and the since then it has transformed itself as one of the largest brand in the domestic economy. With the strong strategic development and market penetration techniques the firm has transformed itself as one of the best service provider in the economy. During 1985 the brand launched Vodapage with which the firm provided 80% of the population of the state with a paging service and next to this during 1994 it introduced country’s first GSM service that made the Vodafone one of the largest service provider in the economy. Next to this, Vodafone introduced Globalstar satellite phone service and in 2001 3G voice service was introduced by the brand. Continuous successful implementation of the latest technologies in the state has caused them to win National Retailer of the Year during 2005 and with the successful endeavours during the next subsequent years during 2010, the brand has won Best Network award in UK showcasing the presence and the level of acceptance of the brand. With continuous growth of the urbanisation in the state, number of stores of the Vodafone in UK has introduced by a large number and advertising campaign of ZooZoo has kept the brand in limelight in the UK.
Diversification:
Vodafone is acknowledged as one of the largest network service provider in the economy and utilising the global Machine to machine (M2M) service along with the Wireless Broadband (WiBRO) it has diversified its business by a large extent. For the different usage of the customer internet service of the brand can vary from 30 to 50 MB/S and marginally growing rural presence of the firm is aiding it to gaining large market share in the domestic economy.
Product development:
Ranging from 2G GSM service to latest 4G LTE or VoLTE service is available with Vodafone UK that makes it one of the largest brand that has developed large amount of product for their customer. In addition to this, it has also been seen that market for the Vodafone, has been growing with the availability of the wide range of radio frequency. Vodafone UK offers bundled package for the customer in order to enjoy seamless internet and telephony service along with mobile handsets that has allowed it to capture a large amount of market.
Conclusion:
From the above explanation it can be seen that the Vodafone UK is one of the largest brand in the economy that has a well-established and stable market with good amount of product diversification and strategies for market penetration. Moreover, stable economic and political condition in the UK along with good social acceptability it has potential to grow as one of the largest telecom service provider in coming years again.
This section of the report will provide details regarding the strategic capabilities and insight view regarding the VRIO model for the Vodafone in order to understand the internal environment of the firm. Next to this, this section will focus on the strength and weakness of the firm.
Strategic capability defines the ability of a business to successfully an effectively employ competitive strategies so as to enhance revenue and survive during long run. It does not take care of the strategies for the business rather focuses on the assets of the organisations as well as the position of the market in order to determine how well new strategies can be employed for the future prospect of the firm.
VRIO stands for the Value, rareness, imitability and organization. Applying the VRIO model for the Vodafone UK, it can be seen that the resources utilised by the firm are valuable and allow it to utilise the same for improving the efficiency. In addition to this comparative parity of the firm is present in case of both the long and short run and the firm enjoys competitive advantage due to their high speed broadband service. Inimitable products are not produced by the firm because each firm operates in different frequency however it is possible for the other firms to follow the strategies of the Vodafone. The organisation is highly organised that makes it one of the sustainable and competitive firm in long run.
Strengths of the Vodafone UK are as follows:
Weakness of the Vodafone UK are as follows:
This section of the report will focus on the analysis of the telecommunication sector of UK. As per the latest data, it is one of the fastest growing market of telecommunication in the world. People of UK are focus more on the fixed broadband connection provided by the large brands like Vodafone due to their cost advantage. Availability of the 4G technologies has aided the economy to enjoy 45% rise in the subscription in telecommunication user from 2016 to 2018 first quarter. There are more than 26.4 million people having fixed landlines and 94% of the population of the country own mobile phone that highlight the growth of the telecommunication sector in UK. In order to understand the same, next to this the report will utilise the Porter’s Five Force model that will define the market competiveness and the growth prospect.
As per the data only 6% of the population does not have any mobile or landline, which showcase the importance of the telecommunication service in the state. Large number of buyers gains low amount of bargaining because the price is fixed and determined through the competition among the suppliers.
There are more than 8 large telecommunication service provider in UK that makes the market highly competitive. In case of the price changes consumers can shift easily from one service provider to another that reduces the bargaining power of the suppliers. Under this situation supplier cannot determine the price at their will.
There is high risk to the existing firms in case of new entrant. Under the present market structure, if a new firm enter and starts to provide service at a lower price, then it will force the existing price to reduce their profit margin and reduce the price. Under this scenario, threat from the new entrant is high in front of the firm like Vodafone.
Presence of the alternative brands that provide almost identical service as Vodafone makes the threat of substitution moderate. Price rise or reduction in added service will allow the customer to shift to another service provider easily, which make the degree of threat from substitution moderate. However, presence of the unique services like wide coverage of network, fast internet from the Vodafone is potential enough to hold the customer back.
Due to the presence of limited number of firms in the UK market is oligopoly in nature; however, the firms operate under a competitive scenario where they prefer to go for rivalry pricing rather than curtailing the same. Vodafone being a large operator have good amount of market share however, rivalry within the firm is high and each firm wants to enjoy most amount of market share through capturing most of the market demand.
From the above discussion it can be seen that the UK telecommunication market operates under a competitive environment where limited number of firms operate, yet they prefer to go for the collusive pricing strategies in order to gain much amount of market share and generate higher revenue. Though the market of telecommunication in UK is saturated, however, through introducing newer services, operating firms try to entice the market under the moderate threat of substitution that reduces the bargaining power of the supplier as well.
Vodafone is one of the largest operating firm in the UK and with their large amount of services it has potential to become one of the largest firm in the domestic economy. In order to doing so, the firm need to develop the proper strategic direction that will allow it to achieve its desirables. For the purpose of the same, this report will utilise the Bowman’s strategic clock to decide the present strategies on which the firm focus and the strategies on which it needs to focus. Post this, the report will provide tangible and tactical strategies depending upon the objectives and priorities of the Vodafone for the UK market.
Strategy clock of Bowman is a model that provides details regarding both the market position of the firm enable it to develop plans to deter market competition as well. Details regarding Bowman’s strategy clock for the Vodafone is as follows:
Position 1:
It depicts the low price of the product and low added value of the service from the brand and thus it is not such a position utilised by the firms for the growth of the same. Keeping price low is one of the competitive strategies, however, low price defines lower added value of service that hampers the popularity of the brand. Though Vodafone provides service at a reasonable price, however, value added service is high in case of the firm germinate through the bundled service like network connection and mobile device from a single package.
Position 2:
Low price is one of the best strategies to enjoy competitive edge over the peers firms. In case of the economies of scale and higher number of production leads to the fall in the price that provides quantitate easing facility to the consumers. Considering the case of the Vodafone UK it can be seen that the brand operates in such an environment that it has well defined targeted audience and market share is high that enables it to provide service at a reasonable price.
Position 3:
This position is a hybrid position of both the low price and added value to the service. Firms that operate in this position enjoys large amount of economies of scale where it produces goods and services at a lower price and keeps the price in order to win the market. On the other hand, providing value added service firms operating in third position attempts to gain much amount of market exposure. Considering the Vodafone UK, it can be seen that the firm operates in such a way that it provides large amount of added service at a reasonable price that makes it is one of the most acceptable brand in the state.
Position 4:
Product differentiation is another suitable strategies where firms can enjoy demand from their diversified product range. Firms which are operating in position 4, focuses largely on the product differentiation and develop different goods and services in order to gain much amount of market exposure. In case of the Vodafone UK, it can be seen that the firm has diverse range of the products in order to serve different type of customers.
Position 5:
In position 5 firms which operate focus mainly on the focused differentiation which is an exclusive strategy to the exclusive and luxury brands. High quality and high price are two main criteria that determine the success of the brands operate under this strategy. Though it lead to high profit, yet the market share is limited and success in long run is not secure. Vodafone UK does not operate in luxury section because it tries to keep the price competitive with benchmark quality of service.
Position 6:
Utilising the high pricing channel firms that operate in position 6 decides their strategy and aims to earn high amount of profit limited number of sales. Vodafone UK operates in a competitive environment, where it focus on gaining much amount of market share through higher amount of sales and keeping the margin lower.
Position 7:
Brands with good amount of market share practice monopoly pricing which depicts the position 7 in the decision clock. Mobile network in UK is a monopoly market under which there are 8 large firms operate with shared market share. Though Vodafone in UK is the third largest operational mobile network service provider, yet does not practise monopoly pricing, rather focus on competitive pricing.
Position 8:
In case of loss of market share firms operating in position 8 forced to charge higher price and allows the customer to go away. Considering the Vodafone it can be seen that the firm operates in such an environment where it always try to capture more amount of market share with their continuous endeavours.
Considering the Strategy clock it can be seen that the Vodafone UK operates in position 2,3 and 4 where it focus on product differentiation and providing good amount of service at lower price with value added services.
In order to gain future growth below are the strategies that the firm need to focus:
From the above discussion it can be seen that the Vodafone UK operates in such a environment where it focus on the competitive price and aims to provide added benefit to the consumer. Gaining market share with quantitative easing is one of the primary objective of the brand. In order to face continuous growth the brand need to focus on the strategies like centralised supply chain, development of the top line and others as mentioned above.
Conclusion:
Vodafone is one of the biggest network service provider in the economy of UK. With the successful application of the marketing strategy mix, and the stable external as well internal factors the brand has become one of the largest service provider in the UK economy. This report was meant to analyse the UK telecommunication market and it has found that the UK telecom market is competitive enough due to the presence of the large service providers. Most of the firms among the top services providers enjoys a considerable amount of the market share that provides them ability to influence the market by different degree. In addition to this it has also been found from the porter’s five force model that the UK telecom service providers has considerable amount of power to control the market, whereas threats from the new entrant is high because new entrant can effectively change the market structure of the UK telecom industry. In addition to this strategic analysis showcase that the UK telecom industry has high potential to grow during the coming years as the market is evolving under the continuous process of research and development in the case of the telecommunication in the state. To conclude, it can be stated that the, the report has found that external as well as the internal market of the UK telecom service is stable enough and there is large amount scope for each of the market player in telecom industry of UK to grow in the coming years.
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