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Telstra's Strategic Analysis for Competitive Advantage Assignment Sample
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The purpose of making this report is to develop an understanding importance of a strategic plan in the organization. Telstra Corporation Limited is considered a case company in the report. By using a base of the case company, the report points out various models that are used in making strategies to beat the competitors and gain a competitive advantage over its competitors (Bryson, et. al. 2018). The report aims to bring the knowledge that show how the company can develop its strategies and schemes to increase its market reach in its competitive market. The understanding of how the company can use various analysis tools to develop different planning or strategies to make an effective impression on its customers or how can the company effectively operates in its existing market. This report aims to increase the knowledge of the case company's internal and external environment presence in which the company wants to expand its business.
Briefly describe the background information of the organization
Telstra group limited was founded on 1st July, in the year 1975. The company's headquarter is located in Melbourne, Australia. It covers a worldwide area to serve its services in different locations across Australia and worldwide. The company offers various types of services such as internet, network services, fixed line, data services, mobile telephony, and Pay TV(Telstra, 2022). The current CEO of the company is Vicki Brady and current CFO of the organization is Michael Ackland, and the chairman of the business is John Mullen. Telstra's business lies in the telecommunications industry. The company has around 150 subsidiaries in its operating market.
Telstra also has its website to effectively connect or communicate with its customers. The company is a type of public company that originated in Australia. A case company traded on the platforms such as ASX: TLS, and S&P/ASX 200 component. Currently, the company is working along with 26000 hired employees. In 1993, Overseas Telecommunications Commission (OTC), the distinct administration body recognized in year 1946, was compound with an Australian Telecommunications Concern in brief Australian or Overseas Telecommunications Corporation (AOTC) that continued trading under-recognized personalities of OTC or Telecom. AOTC was retitled as the Telstra Corporation Ltd in 1993.
The company’s is derived from the word called telecom Australia in which TEL is from the telecom or STRA is from Australia. The company then operated under the Telstra brand worldwideor "Telecom Australia" nationally until the unchangingmarking of the "Telstra" was familiarised throughout the entire establishment in the year 1995, following an ineffective attempt to recorda trademark "Telecom Australia". Telstra company has four pillars of their strategy such as fundamentally simplifying the product contributions, removing consumer pain facts ormaking all digital involvements, creating the standalone substructurecorporate unit to determine performance ordeliver future optionality post to NBN rollout, significantly simplifying its arrangement and methods of employed to authorize the customers and assistthose people, industry foremost cost discountpackage or portfolio managing.
Figure 1: Telstra logo
(Source: Telstra, 2022)
External environment analysis choosing a macro-environment analysis
A PESTEL model is an exceptionally common business analysis model used by companies to analyze their external environment (Perera, 2017). The 6 categories of PESTLE analysis are Political, Economic, Social, Technological, Environmental, and Legal.
Below is a Pestle evaluation of industry in which case the company is trading along with the pestle analysis of Telstra:
Figure 2: PESTLE analysis chart
(Source: SlideModel, 2022)
Political factor- Telecommunications industry is affected by numerous dissimilar political elements. The laws or regulations, which govern an industry, are continuously changing, therefore, company managers and leaders in the telecommunication industry require being on top of the variations to break competition (Sabourin, and Jabo, 2022). A political element that affected case company in political constancy, changing strategies, protests group or authority systems, corruption or bureaucracy, trade boundaries, tax policy, or intellectual property protection.
Economic factor - An industry of telecom, is motivating the international economy in several ways (Maneejuk, and Yamaka, 2020). It is significant for the case company, to determine economic elements like foreign exchange or interest rate, inflation, saving rates, labor market circumstances, etc. because they govern the overall financial environment of a country. Rising economies provide wide spread development opportunities to the chosen company. GDP growth rate defines Telstra’s capability to follow its long-standingprogresspolicies.
Social factor- Telecommunications plays the role in how personsinteract or communicate with one another. It has played a vital role in determining the mannerof humanity'srole today. The telecommunications business isa rapid or dynamic field. Considerate demographic tendencies, power constructions, buyers’ spending outlines, or shared opinions can aid the chosen company design operative marketing communications or fulfilling businessgoals. The chosen company is influenced by different social factors such as demographic tendencies, fairness, or power distance, gender characters, social norms or class dispersal, online spending, and shopping patterns or behavior.
Technological factor- This factor is used as means of education, entertainment, or communication. Certainly,the telecommunications industry has been impacted extremelyby thruoutline of innovative technologies(Drobyazko, et. al. 2019). Costs of cell phones or internet strategies have been releasedintensely in current years, whereas at the same time, the variety and quality of goods provided have improvedconsiderably. Thecomprehensiveexamination of a technological situation can aid the company capture technological tendencies to attainassured business benefits likeaccumulative profitability, increasinginventionprocedure, orincreasing operational effectiveness.
Environmental factor - With further technologically progressive goods or services, other dangers come within the environmental factor of this PESTLE analysis. Telecommunications production subsidized 2.6 percent of the overallinternational carbon dioxide (CO2) releases in 2020. So, businesses require to create their goods or services newand maintainable. Environmental values, regulations, and laws differcrosswisein diverse markets. A global presence of the chosen company needs a business to deliberate these alterations to prevent undesired conditions carefully.
Legal factor- Telecommunications industry is influenced by several diverse legal factors. Mainly associated issues with legal factors are with government, customers, or monopolies (Alzoubi, and Inairat, 2020). However, the industry has allowable importing or exporting of telecom goodssuch as international smartphones. Telstra cannot move into a new marketplacelacking studying in an aspectof the legal environment and governingassembly of the new customer market. So, cautious estimation of legal phases is mandatory to prevent getting into some specificmisfortune.
In the conclusion of the above discussion of the company’s external analysis. Political factors apply a strong impact on continuing profitability and sustainability of the chosen company. A complete understanding of an economic environment will aid the company in assessing the development route of business and industry.An exchange rate variation can also affectinternational and profitability trade. A hugevariation in the local currency can bea source of severeapprehension for Telstra.The case company shouldpredict and study,labor market circumstances to realize how it can invite skilled employees or leverage their talent to increasecorporate performance. The commercial practices of a chosen business are affected by the usual economic assembly also. Understanding demographic features can aid Telstra in selecting the right marketplace segments with greatdevelopmentprospects. A company must grow local groups or create local companies for considerate societal approachesor standards to tailor advertisingpoliciesrendering to exceptional cultural perspective. The chosen organization should prudentlydeliberate ongoing technicalinventions to break ahead of rivalry. There is also a rising trend on the way to the use of eco-friendly goods. Telstra can yield it as a chance or can accept green corporate performance to successfully gain the trust of investors. The case company should follow laborsafety and health laws as many countries have severe rules to safeguard labour safety. Data protection has developed into a significant problem due to customers’ security and privacy concerns. The company requires understanding data guard rules to shield their customer data.
Conduct an internal environment analysis
To conduct an internal environment analysis of the Telstra Company, a SWOT analysis is to be considered to evaluate the key strength, resources, weaknesses, and capabilities within an organization. And to analyze the company's opportunities as well as threats are also determined by the SWOT analysis model that provides a sustainable competitive advantage to the chosen company(GURL, 2017). SWOT is an acronym for strength, weakness, opportunity, and threats. To assess the business's competitive situation in market or to improve strategic development for the company, this analysis gives a framework to an organization. SWOT study is intended to serve a fact-based, realistic, and data-driven appearance at company on its initiatives and opportunities in the industry in which it is currently operating.
Strength - This is the company's distinct qualities or uniqueness which offer a business the gain of competitive advantage through acquiring a high market share, maximizing profitability, or attracting more new customers (Joseph,et. al. 2022). Some strengths of the case company are discussed below:
Strong dealer community - The company has adopted a culture between dealers or distributors that dealers are not only marketplace company’s goodsnevertheless also apply in educating salespersons to clarify to consumers how they mightcreate the best use of thosethings.
Trustworthy suppliers - Company has strong base of reliable raw material dealers, permitting it to overwhelmthe supply chain blocks.
Product innovation - The Company has a sound track record of emerging new goods.
Strong distribution network- Chosen Company has generateda reliablecirculationsetup over the years which can shelterbulk of its possible market.
Profitable earnings on capital expenditure - Telstra has good pathway record of concluding new developmentsor creatingworthyprofits onits investment throughformingfreshincomebases.
Weakness- Telstra needs to pay attention to its weakness and try to improve them. The current weaknesses of a company are as follows:
Investment in technology - Additional funding for innovative technology is mandatory (Sukharev, and Voronchikhina, 2018). The company requires to capitalize on more change in the technology sector to uniteprocessescrossways the board, the certain scope of the growth, ornumeroustopographies its strategies to grow into. Presently, technological speculation does not match Telstra’s goal.
Financial planning - Financial planning is ineffective or inefficient. Liquid asset ratios or current asset ratios specify that the business cancreate effective use of the cash that it is currently using.
Unique selling proposition (USP) - Product's advertising decreases short of opportunities (Erlangga, and Erlangga, 2021). Even if company’s good is theachievement of deal, the company’s placing or unique selling proposition (USP) is uncertain that can lead to rivaloutbreaks in themarketplace segment.
Limited success outside core business - Although being one of the industry’s importantbusinesses, Telstra has exertionincreased in the new inventionparts due to theexisting culture.
Opportunity- Through evaluating this element of the SWOT analysis, Telstra gets easy excess to gain a competitive advantage and enhance its sales, profits and results in the operating market as well as in the new market (Ferri, et. al. 2020). So, some opportunities for the case company are discussed below:
Lower inflation rate - The lower inflation rate offersimproved market solidityor permits the companyconsumers to get credit atlower interest rates.
Low cost of transportation - Lowering the cost of conveyanceowed to lesser shipping values can also lessen the cost of the company’s goods, offering the chance for the business to moreoverrise productivity and pass on advantages to consumers in the direction to achieve the market segment.
Consumers developed through online network - An organization placed a lot of capital in its internet stage in last few years. A case companyadded new tradenetwork as anoutcome of theshare. Telstra can exploit this chance in the coming years by improving acceptingconsumers or meeting their demands with big data analytics.
New trends - Chosen Company might be able to blow in the new marketplaces as theoutcome of alteringcustomerperformance. It providescorporations thesuperb chance to expand in the new inventiongroups while also making new income sources.
Threat - This element can inhibit a chosen company's expansion and also the company does not have any control over the threat forces(Kluft, et al. 2020). Following are some threat underline that might be faced by the company:
No consistent supply of innovative products - Numerousgoods have been established by businesses over years, though, they are frequently in response to growth of new players. Secondly, source of innovativegoods is uneven, subsequent in greator low swipes in dealquantities over time.
Imitation of the counterfeit - Telstra’s services are also susceptible to imitating or low-quality simulations, mainly in developing or low-income zones.
Shortage of skilled workforce - Talented labor shortage in assuredinternational markets intimidates the company’s capability to preservereliable profit development in those markets.
Growing strengths of local distributors - Local suppliers’rising power postures a contest in some sectors, as rivalry pays local suppliers better margins.
From the above-demonstrated points, Telstra can effectively beat its competitors and gain various excess in its business life.
Evaluate the generic type of business strategy the firm implements
The best possible way to evaluate the company's business strategy implementations in its current business environment to position itself better than its competitors, Porter's generic model is to consider understanding this deeply(Islami, et. al. 2020). This analysis is the holistic strategy framework that undertakes strategic decisions to study the company's current competitive market. Porter's generic model contains five different forces that are discussed below:
Figure 4: porter's generic model chart
(Source: SlideModel, 2022)
Threats of new entrants- New contestants in the telecommunication industrycarriesinvention, and new traditions of doing operations ormay put a burden on the case company, through decreasing costs, lesser pricing policy, or offering new costoffers to itsconsumers. Telstra has to accomplish all theencounters or makeoperative barriers to maintain its rivalry edge.
Bargaining power of suppliers- Dealers in the leadingsituation can decline the limitsthat Telstra can earn in the market. Prevailingproviders in the telecommunication industry use their exchange control to excerpt higher prices from companies in the telecommunication fields(Cheng, et. al. 2021). A wholeinfluence of greater supplier assigning power is that it drops overall productivity of telecommunication businesses.
Bargaining power of buyers - Consumers are frequently demanding a lot. Buyers want to purchase best assistanceaccessible by givinglowest price potential. Thislaida burden on chosen company's productivity in a long run. A smaller or more influentialconsumer base is Telstra,with higher a negotiating power of its consumersor a highercapability to pursuecollectiveoffers and discounts.
Threats of substitute goods or services- When the new goods or service encountersalikeconsumerrequirements in altered ways, industry effectiveness suffers. The threat of substitute goods and services is high if Telstra proposes value intention which is inimitablydissimilar from the currentcontributions of an industry.
Competition in the industry- If competition betweenprevailing players in the industry is penetrating then it would be driven down charges or reduce the wholeproductivity of an industry(Nashiruddin, 2019). Telstra functions in a highly rival telecommunication industry. And this rivalry does take tax on the overall long-term profitability of a business.
It is concluded from the above report that the company has a greater market reach all over the world. Telstra provides the best possible services to its customers in its operating market. The company already makes its effective position in the competitive market and gain a competitive advantage over its competitors, by applying different innovations in its business timely. The case company is better performing in the consumer market and attracting more new customers towards its services through making different marketing strategies according to the local and international market. Telstra Corporation Limited effectively analyses its external as well as internal environment and develops strategies based on its evaluation.
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