Applied Corporate Strategy Assessment: Strategic Analysis Report

APPLIED CORPORATE STRATEGY ASSESSMENT: STRATEGIC ANALYSIS REPORT ON VODAFONE CASE
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Table of Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc44501221 \h 3External Analysis PAGEREF _Toc44501222 \h 3PESTEL Analysis PAGEREF _Toc44501223 \h 3Porter's Five Forces PAGEREF _Toc44501224 \h 4Summary of Key Issues PAGEREF _Toc44501225 \h 5Internal Analysis PAGEREF _Toc44501226 \h 5Resources: Strengths and Weaknesses PAGEREF _Toc44501227 \h 5Physical Resource PAGEREF _Toc44501228 \h 5Human Resource PAGEREF _Toc44501229 \h 6Financial Resource PAGEREF _Toc44501230 \h 6Key Competencies PAGEREF _Toc44501231 \h 6Value Chain Analysis PAGEREF _Toc44501232 \h 6VRIO Framework PAGEREF _Toc44501233 \h 7Summary of Key Issues and TWOS Matrix PAGEREF _Toc44501234 \h 9Strategy Evaluation: SAF Strategic Model PAGEREF _Toc44501235 \h 9Suitability PAGEREF _Toc44501236 \h 9Acceptability PAGEREF _Toc44501237 \h 9Feasibility PAGEREF _Toc44501238 \h 10Conclusion PAGEREF _Toc44501239 \h 10Reference List PAGEREF _Toc44501240 \h 11
Applied Corporate Strategy Assessment: Strategic Analysis Report on Vodafone Case
Introduction
With advanced innovations, changing consumer demands and emerging competition, businesses are adopting creative tactics to attain a competitive advantage in an aggressive market. As per the study of Ang (2016), the telecommunication industry faces the primary threat from the upscaling competition and transforming technologies because consumers demand innovative services with time such as 5G and other mobile data applications that create a significant experience for them to attain ease of communication. Therefore, Vodafone actively focuses on developing the business strategically by overviewing the external and internal environment potentially to propose the sustainable strategies to benefit the firm in developing its reputation and enhance value for the society in sustaining the business environment.
According to the strategic business report of Krieger (2019), Vodafone recently acquired Liberty German and eastern European-Cable networks for enhancing its scope and opportunities by targeting the European region magnificently. The respective firm avails this opportunity with the evaluation of the macro and microenvironment to formulate the best strategic approach. Similarly, the report focuses on investigating the opportunities and threats of Vodafone and avail those benefits by maximising its strengths and minimising its weaknesses in a viable environment. Furthermore, the research emphasises on the theoretical frameworks, including PESTEL analysis, Porter's five forces, VRIO framework and SAF model to propose the best strategic models for Vodafone.
External Analysis
For appraising the external environment, organisation focus on the strategic frameworks, including PESTEL analysis and Porter's five forces to examine the changing trends and competitive intensity of the market (Wu 2020). Following is the assessment of Vodafone's external environment and competitive intensity.
PESTEL Analysis
By concerning Vodafone, the PESTEL analysis examines six issues by indicating the changing trends, emerging risks and opportunities in the macro market of Europe. As per Ulubeyli et al. (2019), PESTEL analysis primarily focuses on the political, economic, social, technological, ecological and legal factors to propose the business threats and opportunities in the targeted market.
Political factor. The annual report of Vodafone magnificently illustrates the position of the firm in the global market and highlights the changing trends and complications in which, the political pressures and changing regulations can affect the performance of the firm. Furthermore, the competition in the telecom industry encourages political authorities to be more accountable by monitoring the processes systematically with excessive political interventions in organisational practices. Other than that, trade wars due to political clashes further create an impact on Vodafone performance (Vodafone 2019). With this approach, Vodafone actively avails this opportunity in the macro environment and maintain a strong association with European government and policymakers by acquiring the European-Cable networks (Foster 2019). Thus, it is worthy for Vodafone to manage political threats beforehand.
Economic factor. Due to improving digital transformation, Vodafone identifies the boost in the economic growth of Europe along with other leading markets including Italy, Spain and others with little complexities. With the evaluation of Vodafone annual report (2019), the policymakers and regulation bodies identified an opportunity in the European market with the gigabit networks that improve digital competitiveness in the region. Therefore, Vodafone can attain an advantage from the ease of economic policies to enable its network, but regular taxation and economic disruption can create a threat for the firm. The other complexity of economic change is the Brexit issue that dramatically affects the outcomes of the firm due to irregular policies in the UK and European region.
Social factor. The social factor and changing dynamics of consumer preferences in the digital sector are emerging, which potentially raised the demand for the faster network in the consumer segment, business segment and other segments. According to the annual report of Vodafone (2019), the company deals with three consumers and faces threats from the fluctuating social demands. European consumers excessively demand the fastest mobile data. On the other side, enhanced social interactions transformed the demand of businesses from traditional networks to the Software Defined Networks (SDN) for enhancing the process efficiency, automation and simplifying operations. Furthermore, the increasing online traffic on shopping and other social bonding will rise by 78% until 2025 can influence the business in positive as well as negative manner if not achieved the demand appropriately.
Technological factor. The technology boom and increasing focus on advanced technologies enhance the demand for the telecom industry in the international and European market. The study by Thomson (2019) explains that the evolving technology changed consumer preferences, and they prefer the latest innovations, including DOCSIS 3.1 upgrade, deeper fibre penetration and excessive speed networks, which can create a threat for the firm.
Legal factor. Due to the quality and sustainable concerns of the European business regulatory bodies, the legal implications are strict for managing the business culture and quality services. Therefore, the restrictive measures to avoid corruption, bribery, money laundering and anti-competition concerns are the opportunities for offering sustainable telecom services. Other than that, maintaining privacy is the most critical threat for the firm in case of telecommunication business as they record data for evaluating consumer preferences (Dziedzic et al. 2017). Henceforth, the company needs to focus on cybersecurity and data protection exceptionally.
Ecological factor. The exacting policies regarding the maintenance of environmental sustainability with the reduction of carbon emissions and other factors that might affect the environment can impact the cost and level of effectiveness of the firm (Vodafone 2019). With this external pressure, a company can reduce its reputation among consumers for not following environmental policies.
Porter's Five Forces
Another way to evaluate Vodafone is through Porter's five forces, which is the strategic model to evaluate the competitive intensity of the firm in the targeted market by focusing on the following factors (Khillari, 2020).
Competitive rivalry: high. The competitive rivalry is high in the telecommunication sector because of transforming technology. However, Vodafone changed the dynamics of competition by acquiring Liberty Global by which it enhances its market from Hungary, Czech Republic and Romania to the European nations with the supply of broadband and TV services primarily in Germany which became the largest market of Vodafone in 2019. With that approach, the company effectively competes with the Deutsche Telekom; the most prominent European supplier of telecom services (Warner 2019). As per Fildes and Georgiadis (2019), BT, Telefónica and Deutsche Telekom are still the strong rivals for Vodafone in the European region with their high-speed networking services.
Supplier's bargaining power: medium. By overviewing the bargaining power of supplier, the industry has few suppliers and no substitutes, whereas the switching cost is high due to the quality orientation and reliance on suppliers. Vodafone is dealing internationally, and the disturbance in supplier relationships can enhance delays in networking and increase the business cost. Therefore, suppliers' power is medium in this case.
Consumer's bargaining power: high. In the case of the telecom industry, the bargaining power among consumers is high because of no loyalty with telecom brands and low switching cost. Customers can easily replace their brand depending on the low cost, high quality and efficient network.
Market entrance threat: low. In the telecom sector, the threat of new entrants is low because of the high licensing cost and the competitive market of significant firms that already expanded internationally. Therefore, the present firms have no or limited threat from the new entries.
Substitutes' threat: medium. By evaluating the threat of substitutes, the telecom sector faced the medium threat from the substitutes due to the difference of importance. Henceforth, online communication would be increasing, but it complemented the demand growth of the telecom industry.
Summary of Key Issues
The identified issues from the external evaluation include the fierce rivalry in the telecom sector, strict legal implications, significant sustainability concerns, global politics, growing demand for technology, a shift in consumer preferences and disruptive economy.
Internal Analysis
Other than macro analysis, micro environmental analysis is essential to grow smoothly as it supports the management in eliminating business weaknesses and advance the potential strengths. By inspecting the Vodafone's performance globally, Vodafone (2020) illustrates that the company is leading in the International market with its innovation and high-speed networking. Recently, the corresponding telecom firm delivers the latest services, including Internet of Things (IoT), 5G and other innovations that transformed the market utterly to gain the advantage over competitors. With its success, the company expanded to 24 countries, partnered with 42 mobile companies and delivered fixed-broadband into 19 markets. By 2019, Vodafone further advances its connection by spreading the business into the European market and targeted up to 640 million customers and 14 million TV broadband customers. For examining the Vodafone internal capabilities, pointing out the strengths and weaknesses is vital for formulating active strategies.
Resources: Strengths and Weaknesses
The internal resources of Vodafone are discussed in three categories, including physical, financial and human resource. Along with high competencies, Vodafone faces two serious complications that include the complexity in aligning with legal regulations related to privacy and confidentiality, cyber threats and increased debt level with emerging global Expansion can create multiple operational, reputational and financial risks for the firm
Physical Resource
By assessing Vodafone (2019), dynamic financial and service delivery performance, high accessibility, differentiation with other rivals and launching innovations in operations including big data for recording information, digital channels for sharing, Vodafone application to engage, chatbots and enhance the frequency of contacts are other capabilities of Vodafone. Besides that, leveraging group scale is strength for Vodafone as it reduces the operation cost of the business. On the contrary, global pressure affects the company internally with cyber threat risks and information security. Contrarily, the adoption of digital resources as the physical asset of the firm creates trouble for settling the privacy concerns of the firm. The major weakness of Vodafone emerged due to global Expansion which enhances the threat of cybersecurity risks with improving technology. As per Vodafone (2019), the firm faced the particular risk factor due to the gap in protection policies that negatively influences the brand reputation in the market due to the interruption of confidential data and breach of information from the internal sources. Henceforth, Vodafone transformed business innovation, and the developing cyber threat affects the financial position with GDPR fine.
Human Resource
By overviewing the strengths of Vodafone, strong customer engagement, digital transformation and developing the digital society are the primary success factor of the firm. Other than that, its ongoing Expansion into geographic markets, skilful human resource, augmented supply chain management, adoption of digital and simple operation, strongly connected with European regulators, strong partnerships with global suppliers, robust association with customers with diverse digital platforms can attain through the competent human resource in the firm (Vodafone 2019). However, the legal compliance in maintaining business competition, economic sanctions, privacy policies, anti-bribery, and other policies related to the international demands needs to be fulfilled by focusing on the competency of human resource. The weakness identified in the case of Vodafone is lack of monitoring on the legal breach cases internally that affects the financial with cost and reputational damage (Vodafone, 2019). With the alteration in business operations, working parameters, digitalisation and financial effectiveness, European market emerge the risk of legal compliance due to the complex system.
Financial Resource
By considering the financial effectiveness of Vodafone, the company expanded the business with various investments globally to extend the operations geographically to capture excessive markets with its competent services. Therefore, the company acquired the European firm to excel its reputation, but that enhanced acquisitions improve financial debt as well, which can recover effectively with the smart utilization of assets (Vodafone, 2019). In this case, financial resources support the firm to expand productively.
Key Competencies
By determining the internal resources of Vodafone, the ley competencies examined through the value chain analysis and VRIO framework to predict the most appropriate resources to attain a competitive advantage in the future.
Value Chain Analysis
The focus on Vodafone value chain, innovation plays a dominant role in it. The management develop digital business infrastructure to sustain the present demand of consumers by offering them advanced innovative services. Other than that, R&D performs extravagantly to propose new technology to create profound influence in the market with developing technology and creative workforce. The supportive activities are transforming in the case of Vodafone. Moreover, the primary activities, including inbound-logistics, build a strong association with global suppliers to target the mass market. On the other side, marketing, services, operations and outbound logistics are handles with the digitalized approaches because the management considers innovation as the content strategy to manage business cost and enhance firm's efficiency to create the competitive advantage and outperform competitors globally (Vodafone, 2019). The following figure illustrates the value chain linkage between the primary and supporting activities of Vodafone.
VALUE CHAIN ANALYSIS

Firm Structure

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