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A basic theory of marketing defines that in order to increase the sales, a positioning of the services, as well as products in the market, must be done by the company in such a manner that it has been believed by the customer that there is the requirement of specific service and product or a product or service which is being required by the customers have specific advantage. This assignment will be carried out by considering the case study of Telstra Corporation Limited which is the Australian telecommunication company and operates and build telecommunication networks. Their products include mobile, pay television, voice, internet access and many other products. The objective of this report is to discuss the external and internal market of the company and to make an evaluation of different threats and opportunities which is there in the company.
Industry/ Market analysis
Industry analysis is basically a tool that facilitates understanding of the company regarding its position relevant to the other organisations that make the production of similar services and products. Understanding the work force in the whole industry is the major component for the effective planning of the strategic (Armstrong et. al., 2014). Telstra belongs to the telecommunication industry of Australia where the consumer makes payment of the premium price due to the distinctive essential characteristics of the telecommunications market of Australia. Industry analysis of Telstra can be done with the support of Porter’s five force analysis:
Porter’s five force analysesare being considered as the strategic management tool for making an analysis of industry and to have an understanding regarding underlying profitability levers in a company. This tool focuses on how a company can develop a sustainable competitive advantage in the industry of telecommunication services.
Threats of New Entrants
In telecommunication services, new entrants bring new ways, innovation to carry out things and this thing put pressure on the Telstra. With the support of the cost reduction, low strategy of price and provision of the new value proposition to customers, company has to face all such challenges and makes the development of the effective barriers to secure its competitive edge (Plans, TELSTRA BUSINESS LANDLINE PLANS).
The company can tackle new entrant’s threats by making innovation in the services and products, by developing economies of scale, by spending money on the development and research and by the development of the capacities
Bargaining power of suppliers
Majority of the companies in Telecommunication industry purchase raw material from different suppliers. Suppliers who are there at the dominant position can make decrement in the margins which company can earn in the market. Power suppliers in telecommunication industry make use of negotiating power so as to get high price from the companies (Quinn-Allan, 2012).
Telstra can tackle this thing with the development of the effective supply chain, by making experiments with the design of the product and with the development of dedicated suppliers.
Bargaining power of buyers
Buyers are generally a lot of demand. They want to have the best product which is available by making payment of the minimum price. Due to this thing, there will be pressure on the profitability of the company in the long run. The company can tackle the buyer’s bargaining power by developing a large customer base and with the rapid innovations.
Threats of substitute products or services
When the new service or product meets with similar requirements of customers in a distinct manner, the profitability of the industry suffers. There is the high threat of the substitute products if there is the offering of the value proposition which is different from the current offerings (Wilson et. al., 2012). Telstra can handle the threat of substitute products by having a proper understanding of the customer’s need, by being service oriented and by making increment in the customer’s switching cost.
Rivalry among existing competitors
If there is the intense rivalry among the competitors then there will be a decrease in the prices and also in the industry’s profitability. Telstra makes operations in the competitive industry and this makes an impact on the profitability of the company. Company can handle this by the development of the sustainable differentiation, by developing scale so that there can be good competition and by making collaboration with the competitors to make an increase in the size of the market (Jobber & Ellis-Chadwick, 2012).
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A significant role is being played by the political factors in making determination of the different factors that make an influence on the profitability of Telstra in a particular market or country. Company can make a close analysis of the different factors before investing as well as entering in the market:
- Political stability as well as the significance of the telecommunication sector in the economy of the nation.
- Risk related to military invasion (Peattie&Belz, 2013)
- Corruption level- especially regulation level in the telecommunication
- Interference and bureaucracy in the telecommunication industry
- Legal framework for the enforcement of contract
- Intellectual property protection
- Regulations of tariffs and trade
- Wage legislation, taxation and employee benefit.
Economic : The macro environment factors like interest rate, economic cycle, and foreign exchange rate and saving rates makes a determination of the aggregate investment and demand in an economy. While factors of micro environment like competitive norms make an influence on the firm’s competitive advantage. Telstra can make use of the economic factor of the company like industry and inflation economic indicator and growth rate like consumer spending and industry’s growth supports in forecasting the trajectory of growth (Lovelock & Patterson, 2015). Some of the economic factors which must be considered by the company are:
- Type of economic system
- Exchange rate
- Level of education in the country
- Financial market’s efficiency
- Growth rate of economy
- Unemployment rate
- Discretionary income
- Inflation rate
Social : Culture of the society and the manner in which the work is being done makes an impact on the organisation’s culture in the environment. Shared attitude and beliefs of the population play a major role in how the company’smarketers will have understating of the customers in the market and how marketing message will be designed (Hartley &Claycomb, 2013). Social factors which the company must analyse can be defined as follows:
- Level of skills and demographics of population
- Power structure, hierarchy and class structure in society
- Level of education
- Leisure interest
Technological : Technology is making fast disruption in different industries. A company must not just do industry’s technological analysis but also the speed through which there is disruption of technology in the industry (Armstrong et. al., 2015). Analysis of the technology makes the involvement of various steps which can be defined as follows:
- Impact of technology on the offering of the product
- Technological development by the competitors of the company
- Technological diffusion’s rate
- Influence on the structure of cost in the industry
- Influence on the structure of the value chain in the telecommunication industry
Environment : Different markets are having different environmental standards as well as norms which make an impact on the organisation’s profitability in the market. Before starting a business in the existing market and making entry in the new market, the firm must makean evaluation of the environmental standards which are required to make operations in the market (De Mooij, 2018). Some of the factors of the environment which must be considered by the company are as follows:
- Change of climate
- Water and air pollution
- Laws which regulate pollution of the environment
- Endangered species
- Support for renewable energy
- Management of waste in the telecommunication industry
Legal : In various countries, legal institutions and frameworks are not enough to give protection to the rights of an organisation’s intellectual property. A firm must make a careful evaluation before making an entry in such kind of markets as this will lead loss of the secret of organisation (McDaniel & Gates, 2013). Legal factors which must be taken into consideration by the company to make entry in the new market can be defined as follows:
- Discrimination law
- Protection of law
- Law of health and safety
- Employment law
- E-commerce and consumer protection
- Intellectual property law, patents and copyright
Nature of Competition : The main competitor of the Telstra is Optus which is making operations in the same industry and giving tough competition in relation to the offering of services and products. Market place of the Telstra can be analysed by contrasting as well as comparing its strengths and weaknesses with the Optus.
· Leading information service and Telecommunication Company and making expansion in operating margin.
· High amount of service portfolio
· Strong base of customers (Czinkota&Ronkainen, 2013)
· Actively sponsor high-class sports events
· There are around 35,000 employees who are giving services to customers of 230 territories and nations.
· It is the largest company in the telecom industry in Australia.
· Fast local support and reliable services
· Increasing internet and mobile customer base
· Having their availability in the vast region around the nation
· High investment
· There are 8500 or more employees in the company
· Smaller players acquisition has given strength to the brand
· The company is having limited liquidity position
· There is tough segment of the market which means the market share is limited.
· They may lose the advantage of first movers
· The company is having limited regional presence in comparison with the global competitors (Huotari&Hamari, 2012).
Competition is basically a rivalry or contest among the two or more than two entities, economic groups, individuals, companies, social groups and many others. It is generally the condition or activity that supports in striving gain or helps in winning by establishing or defeating superiority over the others. Telstra is having strong competition with Optus but still is ahead of it. For beating the competition, there is the structuring of the market. There are different types of market structure which can be defined as follows:
- Perfect Competition: In this market structure, a large number of sellers and buyers are there. All the sellers which are operating in the market are small in competition with each other. The products which are there in the market are homogenous.
- Monopolistic competition: In this market structure, a largenumber of sellers and buyers are there, but they are not selling homogeneous products. There is the similarity in the products but sellers make selling of different products. Telstra makes operations in the monopolistic competition market (McDaniel & Gates, 2013).
- Oligopoly: In this structure which is there in the market, there are few firms and in this case, buyers are very great in comparison with the sellers.
- Monopoly: In this market, only one seller is there and the entire market is being controlled by a single The company can set price as per their wish and have all the power in the market.
5. Market segments – Primary and Secondary
The Telstra’s primary market segment is the working professionals. The majority of the people are from the working class who are fond of the technologies and make use of it in a large manner. It has made an impact on the management of the Telstra to make development of effective strategies in order to fulfil the requirements of customers. Telstra is the pioneer of 4G and 3G services in Australia. They have introduction of these services so as to meet the level of expectation for the primary target market. They also give close attention to the customers’ requirements (De Mooij, 2018). They have made the introduction of the innovative and new mobile phones with different features for customers who are having interest in technologies.
Secondary target market of the company is the people from lower income group. They have made the introduction of some schemes with very affordable price which will be beneficial for the low-income group individuals.
6. Level of involvement (Primary market only)
The level of involvement describes how personally a company is interested in consuming and how much information is being required to make a decision. The involvement level in buying decisions could be defined as a continuum from the decisions which are fair for the decisions that need extensive thoughts and high involvement level. Whether there is a low or high decision, there is the involvement of customers (Huotari&Hamari, 2012). Customers who are having no experience and who purchase a product have high involvement in comparison with the one who replaces a product.
Brand personality of the company makes an impact on the mind of the customers as well as on their decisions. If the company will be having a good brand image then more and more customers will be attracted towards the company and if there will be a negative image then there will be a decrease in the amount of the customers. Behaviour of the customers of Telstra is more on the technological side. Most of the customers of the company are fond of the technology and good telecommunication services (Hartley &Claycomb, 2013). Majority of the company’s customers are having interest for the good internet and telecommunications services and this is the reason company is having involvement in the telecommunication and IT services for the business customers.
Positioning : The Telstra’s positioning map makes the description of the two main factors of the company that is the company’s competition and the involvement regarding primary segment in the process of decision making of the company. It has been analysed from the report that major role is being played by the primary segment in making an influence on the decision making the procedure of the firm (Armstrong et. al., 2014). In the positioning map, there is the active involvement of the primary segment in the development of the strategies.
Therefore, it has also been analysed that the main competitor of the company is Optus and Vodafone. Tough competition is being given by them to the leading company in telecommunication services in Australia.
It can be concluded from the above report that Telstra has set up a milestone in the industry of telecommunication. It has brought various changes in the telecommunication network’s history. They make provision of a large number of services to its customers and have full focus on the demand of the customers. The firm mainly focuses on the working professionals and they are also considered as a primary segment of the company. From the report, it has been analysed that Optus is one of the main competitors of the company and to beat the competition, Telstra is making various strategies. The company mainly operates in the telecommunication industry which is the leading one in Australia and Telstra is having a good position in the industry. Apart from this, it can also be said that, in order to remain at a good position in the market, the company must have a proper analysis of the market and customer requirements.