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  • Subject Name : Management

Strategy for The Telecommunication Industry

Executive Summary of Telstra Functioning Analysis

This report highlighted the business environment in the telecommunication industry and the functioning of Telstra. Telstra has developed a business segment through product offerings in broadband and internet services. It has played a major role in upgrading existing supply to the government on a new network. The blue ocean strategy provided an overview of the product innovation competency in the market for the dominant share in the market. The telecommunication industry is highly competitive with an increase in consumer base the company is developed services and pricing to the create market base. It addressed the critical success factors that are valued by the customers such as price, frequency, customer service, speed, quality in service. The increase in digital penetration, use of mobile as a medium of communication have led to large consumption of data, wireless technology as an advantage for Telstra. The firm used innovation that generated reluctance with current revenue measures and strategy canvas by innovation organization to develop a blue ocean strategy. Blue ocean strategy focused on movement to excellence by effective approach in activity administrative decisions for high performance. The technology factors impact have favored the company growth with a rise of 5 G and support infrastructure

Table of Contents

Purpose

Company Introduction and History

External analysis

PESTLE analysis

Summary of PESTLE

Sustainability issues presented in PESTLE

Porter’ 5 five force model

Summary of five force analysis of Telstra

Impact of sustainability on threats of substitute

Strategy canvas

Strategy canvas for business model

Critical success factors

Blue Ocean

Blue ocean market identification

Conclusion

References

Purpose

The purpose of this report is to understand the business dynamics of the industry and its functioning to develop knowledge on telecommunication and Telstra is a leading company.

Company Introduction and History

It is the largest telecommunication brand in Australia by share. It operates in market voice, mobile, internet access, and other product and services such as unified connection and internet of things (Telstra 2020).

The company has started its operations from the Australian Post as Postmaster General in the year 1901 (Telstra 2020). The company has transitioned from state-owned enterprise to a private company that has products in emerging technology. Telstra has owned the fixed-line telephone network since the upgrade to National Broadband Network. It has played a major role in upgrading existing supply to the government on a new network. Telstra has a current position market leader. The company has successfully established customer satisfaction ratings with 72% of service scores (Telstra 2018). The company is looking to establish a digital interface and will invest in the digitization of operations with standalone infrastructure system

External Analysis

PESTLE Analysis

The telecommunication is highly competitive and is driven by macro-environmental factors that impact business profitability and company operations.

Political factors - The Australian government has been favorable to the communication company. The pricing regulations and consumer protection is maintained by the government. The bureaucracy and red tape in the industry is minimum and industry market player are provided support infrastructure for 5 G service.

Economic Growth – Economic growth has been stable with no significant increase and a rise in income level. Telstra has priced its product for all ranges for adorable service to its customer. The industry is capital intensive with low margin to gain profit hence the economic growth is a major contributor in the company operations ( Deloitte 2018).

Social Factors-The increase in digital penetration, use of mobile as a medium of communication has led to large consumption of data, wireless technology with internet and broadband facilities has seen a rise in education facilities and workplaces. The use of site monitoring and cybersecurity service with a rise in leisure activities and digital consumption. The cultural pattern and business segment have led to wireless technology growth.

Technology factors- The technology factors impact have favored the company growth with a rise of 5 G and support infrastructure and use of the internet if things, artificial intelligence, and wireless technology for monitoring (Statista, 2020). The increase in technological advancement has shaped the influx of new brands. The capital investment in the industry is very high with automated inventory has increased. The integration in the supply chain has a long term impact on the Telstra business. Vodafone, TLC, discussion, and analysis we can see that co-players in industry and various internal and external environment affects its expansion. The countries selected Australia are among the growing economies. The business setup and the techno-legal factors state as Australia as more favorable due to the relaxed legal norm for foreigners. It develops AI and modern seamless technology for seamless operations. The rapid internet access and strong encryption and technological research make Australia more adaptable for co-communication ecosystem (Deloitee 2019).

Legal environment- The legal and regulatory environment has been favorable in Australia. It has positively led to the expansion of licensing in the telecommunication industry. Australia s legal landscape promotes the FAIR WORK ACT which protects private information and governs the employment and business handling of all entities. It tirelessly works on providing data security for its members. The legal provisions concerning the manufacturing of handsets by the compliance set by ACMA to maintain the computability standard (Telstra, 2020). The government has established procurement policies and engagement benchmarks for identifying manufacturing standards.

Environmental factors – Telstra has specified its carbon emission reduction strategy for its future program to 50% (Telstra 2018). E-waste is the fast-growing waste in Australia with Australia law has banned the direct landfill disposal of waste. Telstra has developed an e-waste recycling strategy through its mobile muster program. Data growth, energy emissions, and associated energy cost are ket environmental challenges that have an enormous impact on the firm's decision making and development.

Summary of PESTLE

PESTLE analysis shows favorable prospect for Telstra with government provisions and technological advancement that will impact the expansion current portfolio of service and adoption of 5G service

Sustainability issues presented in PESTLE

The data growth and energy cost impact on the business and corporate responsibility influence the environmental factors for stakeholder reports and the usability index in the government previously for all the industry market players.

Change in procurement policies and benchmarking will create additional negotiation cost, benchmarking index to develop in-house manufacturing by Telstra

Porter’ 5 Five Force Model

This model was given by Michal Porter as a tool for assessing the competitive landscape of the industry. The strength if the industry is not determined through the profitability and attractiveness of the market player (Henry 2018).

These forces

  1. Threats of new entrants -The economies of scale in the industry is difficult to achieve. It is easier for Telstra to use cost advantage due to heavy capital. The production is costlier for the newer entrants. Due to these factors, the threat of new entrants is a weak force. The differentiation cost is strong in the industry with strong advertising and customer services by the player on the quality standard. The capital expenditure is high in Research and development for setting new business costs. The distribution of network access is through a retail channel that can be acquired for new entrants. The initial licensing requirements for facility creation and spectrum are complex for the new player to enter into the market (Statista 2018). Telstra can tackle the company through innovation and differentiation by maintaining a strong brand image for retaining customers.
  1. Bargaining power of suppliers- The product offered by the company are less differentiated and making the bargaining power low due to concentred supplier power and high switching cost among customers. The availability of immediate substitutes to the product is not available this makes the force strong. The forward integration is not acquired in the industry. Telstra is in a dominant position as most carriers are reliant on leasing network capacity that helps Telstra in negotiating costs. Suppliers exert pressure due to the consolidation of power and concentrated power with raw material and negotiation.
  1. Bargaining power of customer- Buyers has limited options among the supplier. The switching cost is higher for the customer. The buyer is price sensitive and costs van be manipulated through pricing in the industry ( Henry 2018). Telstra can use the customer base and new market by price sensitivity and technology advantage to acquire a new customer base.
  2. Threats of a substitute- The immediate substitute is not available for the industry which is beneficial for industry market players. This is advantageous for Telstra as customer retention is high due to the factors. The low performance to price ratio creates the switching by the buyer as low (Chernev 2018). However, with disruption in technology can lead to the development of substitute in the future. Substitute can lead to a fall in market share
  3. Rivalry among existing firms- The low product differentiation and high exit barrier creates competitive rivalry development. The industry growth rate and competitor balance are determined by government monitoring and regulation on price cuts and order placement. Due to low differentiation, it creates a strong competitive analysis. The high exit barrier due to telecommunication infrastructure involves a high cost that develops internal industry structure. The existing market player is competitive with marketing and strategy to attract and retain customers for Telstra (Telstra exchange 2018). 

Summary of five force analysis of Telstra

Telstra has developed a new value proportion and pricing strategy. The threats of new entrants are low

The bargaining power of suppliers is high as suppliers can exert pressure and reduce the margin for the company leading to end margin reduction. The large customer base has led to the low bargaining power of buyers and limiting the pricing and offers to retain the customer. The threat of substitutes is medium as technological advancement is high in the industry. The competitive rivalry among firm is strong with advertisement and aggressive discounts the market player exert profitability.

Impact of sustainability on threats of substitute

In business, to the business market, the presence of sustainable substitutes will lead to substitute gaining power as a consumer will change buying behavior and move towards product offering. This will impact the degree of power excised by the substitute in the telecommunication industry.

Strategy canvas

It is a potential tool for enabling executive decisions and developing a business innovation model. It is a canvas that compares competitors according to their performance on key success factors to develop strategies for market space (Forbes 2020). It represents a single glance to the difference between the strategic profile of the market and the company profile. This provides an overview of the customer expectations and service level offered by the enterprise. Telstra is building innovative service foes on augmentation in telecommunication to reduce dependence on back-office service. Digitalization of service for key factors and customer experience will be delivered to customers.

  1. Critical success factors - Critical success factors are particular factors that are valued by the customers. They are the source of advantage such as price, frequency, customer service, speed, quality.
  2. The value curve is the depiction of how a customer perceives competitors' relative performance. This shows comparative difference while consumer purchases or takes service for telecommunication service. Offering radically different services will create a value creator.
  3. Value innovation- It creates the new market space by using the critical factors recognizing customer services The use of design service and rapid innovation and pricing can integrate to better products.

Adapting to the gap in service focus will lead to the creation of better products for the company. The use of focus and divergence will create a divergence in value service ( Forbes 2020). It offers a key advantage to the business by a focus on enabling development through competitors' coverage and developing areas of divergence. It shows white space opportunity by estimating the current structure chart pan for business. The telecommunication industry is highly competitive with an increase in consumer base the company is developing services and pricing to the creative market base and develop key criteria.

Critical Success Factors

The critical success factors of the industry are quality, service, and innovation.

Quality- It refers to the product s quality that is offered by the telecommunication company. It shows the durability of the product in broadband services and mobiles

Service- The factor that customers are keen on after purchase and support during the year. This includes smooth onboarding, online, and offline assistance from the company. Telstra provides bots for support in application service.

Innovation- The company is using innovation to provide personalized service to consumers to reduce back-office dependence. It is focused n automation and digital enterprise.

Blue Ocean

The blue ocean strategy is opening up a new market space and creating demand. It is creating uncontested market space through the boundaries and actions of the market players. Developing and modifying vision for the new market space will create profitability for the business and advantage as innovators over the competition (Blue ocean strategy 2020). The telecommunication network can establish the market for Telstra to gain new innovative space for developing long term measures to acquire market share. Market creating innovation by the firm can generate reluctance with current revenue measures and require a change in mindset by the organization to develop a blue ocean strategy. Blue ocean strategy focus on movement to excellence by a change in activity administrative decisions for high performance.

Improving the design system, run time through artificial intelligence and personalization will help in targeting customers. There is a strong correlation between blue ocean stagey and competitive advantage. Increasing customer service quality by automation and creating a digital ecosystem will develop a growth market for Telstra. Blue ocean strategy requires a mindset development for existing mental horizons and understanding the opportunity areas. It involves market-creating idea to open possibilities for systematically reconstructing market boundaries and developing great value improvements for launching the shift in the market ( Blue ocean strategy 2020). The value proportion and customer behaviors by using the global ecosystem. internet of things with exiting telecom services to in carer user retention. Cannalbailisation of the existing product will develop market-creating innovation to existing products and developing revenue streams. Increase the speed of the Internet and roaming services in addition to investigating and responding to complaints services and linked this with follow-up center around clock as innovation. The advertising and search information provides an opportunity for a comprehensive range of services as offered by Telstra.

Blue Ocean Market Identification

The company has developed a business dimension in the internet of things and internet services. The blue ocean was stagey to leverage its resources in video conferencing. This will benefit the firm by offering bundled services and roll out 5 G services with the in-house application. This opportunity will be a service extension of the current portfolio to innovative offerings.

Conclusion on Telstra Functioning Analysis

Telstra has an opportunity with a strong brand name with the successful integration of technology in the telecommunication industry in Australia to develop distinctive services to expand the market. The company is facing threats from local distributors in some markets with high paying margin as a disadvantage leading to a lower margin in retail distribution.

References for Telstra Functioning Analysis

Chernev, A. 2018. Strategic marketing management. Cerebellum press.

Blue Ocean Strategy. 2020. Tools for strategy. [Online]. Available at https://www.blueoceanstrategy.com/tools/strategy-canvas/. [Accessed on August 28h, 2020]

Deloitte. 2019. Mobile nation. [Online]. Available at https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-mobile-nation-2019-080419.pdf. [Accessed on August 29th, 2020]

Deloitte. 2018. 5G mobile technology are businesses ready to seize the

opportunity. [ Online]. Available at https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-5g-mobile-technology-170918.pdf. [Accessed on August 29th, 2020]

Forbes. 2020. Moving to blue ocean strategy. [Online]. Available at https://www.forbes.com/sites/stevedenning/2017/09/24/moving-to-blue-ocean-strategy-a-five-step-process-to-make-the-shift/#29d229567f11. [Accessed on August 29h, 2020]

Henry, E.A. .2018. Understanding strategic management. Oxford University Press.

Statista. 2019.Australia mobile handset market. [Online]. Available at https://www.statista.com/statistics/488511/australia-mobile-handset-services-market-share/#:~:text=Since%202010%2C%20Telstra%20has%20consistently,years%20between%202014%20and%202016). [Accessed on August 28h, 2020]

Telstra Exchange. 2018. [Online]. Our plan to lead. Available at https://exchange.telstra.com.au/telstra2022-our-plan-to-lead/. [Accessed on August 28h, 2020]

Telstra. .2018. Environment policy. [Online]. Available at https://www.telstra.com.au/content/dam/tcom/about-us/community-environment/pdf-e/Environment%20Policy%20Sep%202018.pdf. [Accessed on August 28h, 2020]

Telstra. 2020. About us. [online]. Available at https://www.telstra.com.au/aboutus. [Accessed on August 28h, 2020]

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