• Internal Code :
  • Subject Code : MAA744
  • University : Deakin University
  • Subject Name : Strategic Management

Strategic Analysis of Telstra, Australia

Introduction

Strategic management planning is a systematic approach to find and solve an issue associated with an organization. It has three elements as mentioned by Surin et al. (2016). Here, I shall analyse the external and internal environment of Telstra and sketch a route map to get a solution for the issues. The External environment will be analysed using the PEST model. Also, the internal model will be analysed using the SWOT model. SWOT models may compare the relationship between the external and internal variables. Thus, it will help this research to ping the ideal accountability tools. The data used in this assignment has been verified with the official record of Telstra. Thus, the result is expected to be more effective.

Background of the Telstra

Business area: Telecommunication

Business geography: Australia, New Zealand

Telstra is a telecommunication giant in Australia providing the 3G and 4G services. Along with them, the company has the largest share in Australia in GSM and UMTS network. The company is blooming up its business. Last year the organization had 25.3 billion dollars net review. This value was 2.2 billion dollars more than their previous year revenue (Telstra. 2020). Now the organization is targeting annual growth of 8% for the upcoming year. However, the pandemic may be a great threat to this achievement. Thus, it is a matter of time to see how this organization recovers from this situation to reach its financial goal.

External analysis of Telstra using PEST

Cokins (2017) opined that the business structure and its operation is a function of the environment in which it is working. The cost has to be paid by the managers if an improper analysis is made before implicating a strategic analysis. It may affect the supply chain of the organization, along with the improper stakeholder relationship policy. Telstra, however, believes to be one of the largest telecommunications companies in Australia. For some reason, for the last few years, the company has failed to be fit and hold a candle in the telecommunications business. Thus, in this research, we shall implicate the external variables associated with Telstra. These external variables are acting like the driving agent of the company's failure.

The PEST analysis is a tool that determines Political, Economic, Social and Technological assistance or limitation associated with the company. According to Surin et al. (2016), this tool is more than just sufficient to cream off the actual flaws in a company's success.

Political analysis: Australia is a politically stabilized and perfect framework system, that provides a perfect transparent policy to frame one's business. The political stability underpins the economic stability and resilience of the nation.

  • The Australian government's business regulatory policy, the environment in the nation for business, has been ranked 15th among the 190 nations in the world for ease of doing business index.

  • The stocks and bonds are completely focused to support the local enterprises in Australia. These financial systems are maintained by the government itself, generating an ideal environment for business.

  • In telecommunication business, the customers must have a quality lifestyle. Australia recorded the 7th highest lifestyle in the world.

Economic analysis:

Australia is one of the largest economies in the world and it produces an ideal place for Telstra to do business. Due to the pandemic scenario, I shall analyse the data of 2019.

  • The population of Australia grew by 0.4 million in 2018.

  • Per capita GDP increased from 55,970 AUD to 56,462 AUD.

  • Economic growth index value raised from 2.5 to 2.7

  • The investment annual variation in the nation is found volatile as it is showing positive and negative results for random years.

  • Due to volatile investment policy, the industrial growth in the nation is also volatile

  • The unemployment rate in the nation is reducing

  • A fiscal debt of the nation in 2018 was -0.5 which is a very low value

  • The public debt of the nation is increasing

  • The inflation rate is very under control and it is showing a stabilized growth

  • Conversion rate is close to 0.7 for the last few years, creating an ideal opportunity for Telstra to expand its wing.

Social analysis:

The Australian lifestyle is very engaging. Thus, it is important to identify the key factors in the Australian lifestyle that may help Telstra to target the scope of their business.

  • Australia is a multicultural and multiracial nation with 3.4% of the people are from Torres Strait Islanders community

  • The life expectancy of Austrian people is 85 years

  • Social engagement culture increases the demand for social media in the nation

  • Fond of sports demands long-distance travel and regular use of a telecommunication device.

  • Mass migration policy after the second world war has given an opportunity to migrants from Nepal, China, India and Bangladesh.

Technological analysis:

Telstra is selling telecommunication devices to the locals. Thus, to measure the competitive value it must measure the technological environment in the nation.

  • Rate of technological advancement in the nation is 4%

  • Telecommunication business in the nation grew from $63 billion to $65 billion in 2019.

  • Local companies are implementing cloud computation and artificial intelligence to serve customers

  • Technology growth in the nation is likely to be higher than other developed nations.

Internal analysis of Telstra using SWOT

SWOT analysis is a tool to compare the internal and external environment of an organization. Here, we shall discuss the same for Telstra. Here, strength and weakness are internal factors while the rest of the two are external factors.

Strengths

● A dominant in the Australian telecommunication industry

● Expanding in Asian nations

● Implementing new technologies such as 4G, Cloud and AI

● Investment in product design

Weaknesses

● Improper customer satisfactory results

● Poor Service and high latency

● High pricing compared to others

Opportunities

● Implementing telecommunication service in Asia

● Joint Ventures in Australia to provide additional services

● Implementing new Informational Technologies to enhance services

Threats

● Saturated telecommunication market in the nation

● Complex lawsuits in Australia

● The pandemic situation for the last few months

Strengths:

  1. Dominant market place: Telstra is a dominant Australian company that provides fixed-line services to the locals. Apart from that, they provide domestic, business and PSTN services. According to McLean (2018), Telstra is the largest Australian brand in terms of subscription and coverage. Additionally, it provides 3G UMTS and GSM service. Also, the company has a 50% share in UMTS services along with Hutchison.

  2. Strategic investment policies of the leaders: At present they are targeting to initiate 98% success in 4G network. Besides, the target for 2022 will be 99%.

  3. Expansion of business: The organization is entering in Asian Market with joint ventures such as Telstra health or Telstra finance, Telstra software.

  4. Investment in new technologies: The organization is implementing 4G networks across the nation.

Weaknesses:

  1. Unsatisfactory CRM: The Google review of the organization is 3.0 out of 5. The review just qualifies to be satisfying the customers. Ample numbers of clients are there not satisfied with the services. The complaint process is traditional and time-consuming.

  2. Latency issue: Even with 3G and 4G services, the rate of latency is higher in Telstra's network compared to other service providers.

  3. Pricing: Even with high latency and poor CRM policy, the company has marked its product higher in terms of price. The similar service in Vodafone or Optus is lower compared to Telstra.

Opportunities:

  1. Joint ventures: As mentioned in the earlier, the company has implemented various ventures in Asian nations. Therefore, the company may start telecommunication service with joint ventures in those nations.

  2. New technology: New IT support such as cloud computation and 4G service across the nation are being implemented.

Threats:

  1. Mobile market: As mentioned by McLean (2018), the Australian mobile market is getting saturated. Thus, it may reduce the demand for telecommunication service.

  2. Complex system: The laws and regulations of the Australian telecommunication system are very complex compared to others.

  3. Pandemic: Due to the pandemic scenario, new installations and subscriptions are getting affected in the nation.

Current Strategy analysis of Telstra.

Improving the structure: At present, the company is reshaping its structure to diminish the issue associated with customer satisfactory reports. According to Ridge (2020), strategic management planning is the leader's tool to fix an existing issue with a systematic motive. Fabus (2018) mentioned that the strategic management planning has three components. They are- strategic analysis, strategic planning and strategic implementation. The analysis has been done above now the implementation will be discussed here.

Artificial intelligence: Telstra has initiated a new cloud computation method that holds the record of the customer's. Additionally, it identifies the needs of the customers. Thus, Telstra can solve these needs.

Pricing: Many of the customers have complained about the high pricing policy of this organization. The accusation is not new to the company. However, until now they have not implemented anything to solve this issue.

Expansion of business: The present market of Asia for telecommunication is increasing. Telstra is already present in the Asian market but not as a telecommunication service provider. Thus, they are planning to start a joint venture program to launch 4G services in these nations.

Grabbing the Australian market (Ling et al. 2019)): As the Australian telecommunication market is saturating since 2019, it is time that Telstra should implement new business as they are doing in Asia. The leaders are already looking for ventures to get support to launch new products. However, the company has raised its share in the telecommunication industry. At present they are holding half of the total share in 3G spectrum service.

Product renovation: As the complaint goes to the pinnacle for high latency in their services. The company has targeted to implement 4G spectrum. They have a target to reach 98% population in this year and 99% population in the following years. However, the present 4G service has not hit the solution for the organization as complaints are still being recorded in the customer portal.

Expansion of business: The aboriginals in Australia are not getting support from the government to improve their social and economic lives (Ridge, 2020). Thus, the company is expanding its business across remote areas. Telstra is promising to provide high-speed latency-free service to the most remote areas of Australia by 2021.

Financial calculation: As a long route is left to reach success, the company requires a financial investment to implement their plan. Thus, they have issued bonds and loans from public debts and banks respectively. There are different types of bonds. Some of them promise to pay a fixed rate of 7% and some are left at a floating rate.

Recommendation and Conclusion

As per the research, Telstra is the largest telecommunication network in Australia and New Zealand. The PEST analysis reveals that strengths and opportunities of the organization are balancing perfectly the issues of clients of the organization. However, there are ample scopes of the organization to improve its business structure. Later SWOT analysis also indicates the same demand from the organization. Thus, I shall recommend a strategic plan for its future business.

  • Telstra has implemented a social media platform. Nowadays, young populations are mostly fond of digital platforms. Such as Facebook, Twitter and Youtube. Telstra should advertise their product on these sites.

  • Customer support is very poor in this organization. Thus, the present CRM policy should be completely replaced with a new one. I recommend Telstra to use Oracle Cloud to implement a better CRM.

  • Telstra is losing its focus from the actual product that they provide. They are looking for joint ventures to implement health products. However, this is nowhere near their present service. Thus I recommend Telstra to stay focused on their present services.

  • Focus on external materials and internals material should be made. The issues associated with such elements should be resolved.

  • The financial budget should be calculated using strategic accountability tools to create a systematic approach to the money supply.

The above recommendations can solve the issues associated with Telstra. However, the application of the recommendations will open the path of future research on this assignment.

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