Mission of Telstra Corporation Limited, SWOT Analysis - Case Study Example

Table of Conten Mission of Telstra Corporation Limited 2 Strategic Position of Telstra Corporation Limited 3 Strengths and opportunities of the Telstra 4 Strengths and Threats 4 Weaknesses and Opportunities 5 Weaknesses and Threats 5 Analysis of Telstra Corporation Limited Management 6 Ethical Decision Making 8 Telstra Corporation Limited Culture 10 Telstra Corporation LTD Planning, Leading, Organizing and Controlling Functions 10 Summary 11 Recommendations 12 References 13 Mission of Telstra Corporation Limited Telstra Corporation Limited (herein referred to as Telstra) is a Telecommunication Company located in Australia. The Company provides Telecommunication and information services for customers in Australia as well as those across the borders of Australia. The Company provides communication access services to business, local, homes and long-distance call services. It has also been rivaling its competitor when it comes to internet service and such has included about 3.5 million broadband subscribers as well as over 15 million mobile telephony users (Telstra Environmental Guidance Document, 2013). The cornerstone of the company’s success is based on its mission---to improve the way people work and live. The vision is encapsulated in a number of ways. First, the company has been signing agreements with other partners and the latest being VeCommerce. In addition to this, the Company uses theoretical models and modern management structures to achieve its mission. Due to competition from companies such as Optus Telecommunication, Telstra have adopted contingency theory where they have tried to identify the situational variables which can predict the most effective and appropriate outcome for a given circumstance. It is for this reason that in 2004 the Company invested A$ 210 million to upgrade its broadband asymmetric digital subscriber line (ADSL) to conform to its mission statement (Baigh, 2013). Baigh also notes that a company’s mission statement can be justified and or aligned in accordance with transformation theory. The relationship between the Company’s mission and transformation theory was conceptualized when it engaged in opening of its first national WiFi network hotspots by the end of August 2014 (Schermerhorn et al., 2014). To be in line with its ‘improve the way people work and live’ the company launched its Next G platform and the 4G platform that now integrates its mission statement as it now covers about 70% of the population (Daley et al., 2012). Strategic Position of Telstra Corporation Limited The mission statement as postulated above should be embedded on both the internal and external environment in which the Company operates. Firstly, internal environment should be based on a comprehensive data and information of the Company. To underscore this statement, the study will carry out internal environment by assessing its Strengths, Weaknesses, Opportunities and Threats (SWOT) framework. Figure 1: Telstra Corporation Limited SWOT Analysis Strengths and opportunities of the Telstra Telecommunication industry in Australia has been driven by stiff competition from rival companies such Vodafone and Optus. Therefore it has been driven by such competition to re-structure its platform so as to accommodate the ever dynamic demands of its customers. This includes its strong broadband performance thus making it have the market share of about 45.3% in the mobile segment (ResearchMoz, 2013). Additionally, Telstra is dominating fixed broadband market besides controlling about 78% share of the industry thus a large revenue base. Thirdly, the Company enjoys favourable and strong legal framework and such is underscored by the recent case with Optus over the shifting of billions of dollars in untaxed profits offshore. Strengths and Threats The level of competition dictates the Company towards sustainable competitive advantage. The operational structure of the Company describes the extent of its operations. All these have been brought by economic, social, political and legislative environment under which it operates. Additionally, the Company has had a series of restructuring measures that bring the understanding that traditional fixed line is no longer the driving force of its revenue growth. To this regard, it is also noted that Telstra had made the way of technical revolution by the end of 2005 (Hubbard, 2008). Such revolution built the most needed wireless broadband system. This has enabled the Company wade off competitions from rival companies. For instance, Optus exaggerated its network coverage area in a TV advertisement---a move that aimed at providing unfavourable condition for operation. Despite these challenges and opportunities, it is apparent that the Company (Telstra) is enjoying the floated economies of scales. To conceptualise this understanding, Peng (2014) explains that in April 2013, Telstra made an introduction of bundles with an aim of providing affordable access to popular Foxtel on T-Box channels. This step gave the Company strength in light of ‘Entertainer Bundle Range’ compared to what other companies are offering. Despite these strengths, it has been established through 2013 financial year that unlike other rival companies, Telstra is over relying on Australia for a good number of its revenue (Telstra Environmental Guidance Document, 2013). In case such revenues are diversified, Telstra will be weakened and thus giving rise to companies such as Optus and Vodafone Hutchison Australia which are subsidiaries of international diversified Singapore Telecommunications groups and Vodafone respectively (Schermerhorn et al., 2014). Weaknesses and Opportunities Telstra Company has its operation penetrating other markets outside Australia, including India (Johnson et al., 2011). In such connectedness, it engages in value added and content services through single portal known as BigPond. It introduced long term evolution (LTE) for mobile internet. Subsequently, besides the successful stories of its 3G that was ahead of others, they grabbed the chance, due to its platform, high-speed 4G thus expanding the 4G coverage to more than 100 metropolitan and regional areas across Australia (Bardoel, 2012). Aras and Crowther (2009) report that there have been high penetration rates for other competitors but the Company seemingly signifies weaker prospects for it to report growth coming as a result of connections from other penetrators. Weaknesses and Threats One of the threats the Company is facing is the saturated market. That is, while it is noted that the Company gains revenues from the Australian Telecommunication or mobile market, there is likelihood that Telstra could be influenced negatively in near future. Additionally, the market is currently full of inevitable variables thus making income difficult to control. Contrariwise, Telstra faces one weakness; it fails to explore new revenue thus not able to expand content of service. It has been reported that the company has introduced services such as broadband and bundled services but these have necessitated through what it terms as ‘One Factory’ but fails to meet specific demands from customers especially after establishment of China’s SouFun Sensis (Cole, 2012). Analysis of Telstra Corporation Limited Management Telecommunication as it is the case with Telstra Corporation Limited has been distinguished by highly competitive market. On the same breath, actors and competitors on the market have been seen to be struggling with the increasing cost of operation, production, development and mature market. It has to be recognized that any management analysis of Telstra Corporation Limited must first recognize the position of the Company. Ideally, Telstra Corporation Limited has Corporate Social Responsibility (CSR) to undertake and such must be conceptualised through its laid platform, structure, financial reports and annual reports. Similarly, evidence based researches have shown that the first step in understanding management of a company is to integrate its undertaking when it comes to CSR and how sustainable the company intends to operate with regard to the environment, competitors and specific objectives (Hamlin, 2002; Hooper and Potter, 2006; James and Burgoyne, 2001). Based on the Company’s Corporate Social Report 2013, its CSR is embedded on four critical issues; internal environment, external environment, customers and sustainability (Corporate Social Report, 2013). From its principled perspective, the primary corporate responsibility can be summarised as (Telstra Business Principles, 2013 as cited in Peng, 2014): Advancing the national environmental interest by strengthening the ability of the company and the country’s telecommunications nerve centre Provision of the country a foundation that ensures economic growth, sustainability prosperity, productivity improvement and global competitive advantage (in 2003/2004 and 2010/2011 Telstra funded 18 and 23 projects respectively to the total value of $11.6 million in bandwidth allocation and cash in the areas of media, education, health, business and rural sector upgrades) Give a leading stewardship of environment by first and importantly, conservation, efficiency in the usage of resources, reducing and maintaining environmental footprint and reduction of operation costs (e.g. it took part in the Mobile Phone Recycling Program that was co-ordinated by the Australian Mobile Telecommunications Associations (AMTA). In the process, Telstra managed to recycle over 300,000 handsets as well as 750,000 batteries into products such as plastics, cadmium and nickel) Contribute towards resources; increasing technology, product services and people in employment to support the communities in which the company operate and the specific needs of community at large (it has been sponsoring the Sponsored Telstra Child Fight where an average of one critically ill child in NSW and ACT is transported on a daily for specialised treatment) It can be established, based on its Business Principles that the CSR is comprised of commitment to reduce any adverse effects on and injury to the environment. Such is also embedded on the desire to preserve the beneficial qualities of the environment, while ensuring quality products and services in Australia. In addition, to the above principles, analysis of the company’s management also considers its efforts it makes in view of social life supports. According to Telstra Business Principles (2013) as cited in Peng (2014), the Company has been supporting programmes engaged in waste management, minimization of greenhouse emissions, vendors’ pursue of environmental improvements---a statement that can be supported by it’s the aftermath of the Bali bombings where Telstra Bali Assistance Programme for families and victims. However, it is worth noting that areas of Telstra’s CSR are multifaceted. However, this study aims at exploring other areas of management analysis and to that regard; Vendor Code of Conduct (VCC) is argued by Katzenbach and Smith (2005) to be essential consideration in the analysis of such managements. Perren and Burgoyne (2010) also recognise that VCC is a myriad concept whose ideal content depends on the industry the company deals with. As a telecommunication industry, Telstra’s VCC is based on 5 areas of concerns; Occupational health and safety Product stewardship Supplier management Environmental management and Corporate governance In as much, other areas of CSR such as ‘Greenhouse Challenge’ program is still associated with the company as such VCC of the company still stretches beyond the list provided above. Ethical Decision Making Telstra business ethics entails standards and principles that guide managers, individuals and work group behaviour in line with telecommunication and terms of service in Australia. Additionally, it is important to note that stakeholders of the company make these conventions (principles) and such have been codified as regulations and laws. Contextualising this definition within the frameworks of VCC and CSR; ethical decision making help Telstra family design strategies that eliminate misconduct. According to Corporate Social Report 2013 there are three significant components that sum up its ethical decision making; ethical decision making being individual factors, ethical decision making being Company’s relationship with others and ethical decision making being opportunities available for the company. Basically, the Company based the three components on behaviourist theory where what matters is what individuals in the Company can do rather than specific quality or attribute. That is, different patterns of individual behaviours are linked to ethical decisions that are made by the company. Relating supplier management, corporate governance and ethical decision making, Telstra has been engaging with Communication Workers Union with a view to offering better terms of service and transparency in supply management. For instance, in 2010, the company engaged Low-Income Measures Assessment Committee (LIMAC) (this is an example of Communication Workers Union which is viewed as independent and transparent committee that included representatives from Anglicare, Australian Council of Social Service, The Smith Family and The Salvation Army) which made changes to the package the Company was initially giving to its workers and suppliers. In connection to this, the company engages in vertical management. Rodgers et al. (2002) define vertical management as a case where a company liaises with regulatory organization so as to have a common agenda and conform to the requirements of the industry. Conceptualist theorists and ethical formalism argue that ethical decision making process in management encompass evaluations of fairness product stewardships but with respect to firm’s overall culture. In summary, Telstra has a well-defined management and leadership structure that is focused on the achievement of defined objectives including ‘green’ managements. Telstra Corporation Limited Culture In order to achieve the specificities of aforementioned Corporate Social Responsibility and Vendor Code of Conduct Telstra needs a well-defined behaviours and values that can contribute to a given economic and social-environmental orientations. In line with competitive advantage and environment of operation, the company defines its culture through its expectations and experiences which is expressed through shared values. Looking at its engagements such as Mobile Phone Recycling Program that was co-ordinated by the Australian Mobile Telecommunications Associations (AMTA), it is apparent that the shared value constituting its culture is geared towards environment conservation, ‘green’ management and creativity. In respect of Corporate Social Responsibility and Vendor Code, the culture is also embedded on unidirectional ethical decision making. This can be attested when the company came up with five programs under its Access for Everyone (the five programs included Telstra MessageBox and Bill Assistance among other three). Cultural orientation of the company is also based on its drive to wade of pollution to the environment and the latest campaign is the raised over $78,000 for Farmhand Telethon before participating in Clean Up Australia Day with 2,600 volunteers (Corporate Social Responsibility Report, 2013). Lastly, the Company approaches the market with idealistic goals---having long term objectives that are economic, social and environmental oriented. Telstra Corporation LTD Planning, Leading, Organizing and Controlling Functions Just like other competitors in the market, Telstra’s planning, leading, organising, controlling and functioning is based on choices made on CSR. Underpinnings of CSR are significant to the company but technical and commercial objectives remains axis of the Company. Therefore the aforementioned elements of CSR are conceptualised with regard to audience or customer satisfaction. This is to mean that in as much as its CSR remains a priority, targeted markets shapes such priorities. This is what Senge et al. (2007) terms as ‘ascertaining CSR policies in downstream and upstream relationships’ (p. 213). From Michael Patterson (Telstra’s General Manager for Tasmania) statement on the legal battle the Company had with Optus, it can be realized that the company’s planning, leading, organising, controlling and functioning fall short of telephony inputs and components that are required in the market. Despite these challenges, it has been noted that Telstra has a comprehensive and well-coordinated CSR programs. This is an indication that there is long term transparency and conformity to CSR and Vendors Code of Conduct models. Assessing Corporate Social Report 2013 vis-à-vis opening of the China’s SouFun Sensis, there is evidence that efforts are diverted to supply chain relationships with third party suppliers as well as other competitors. It is important to note that Telstra is overemphasizing on CSR strategies; an aspect that may affects its ethical decision making. If this stretches beyond what the Company can handle, strategic alignment with other sectors may be affected. Summary As a Telecommunication Company Telstra has had positive and negative financial turnaround. Starting with the positive trend, it has been noted, from management analyses that the company has been recording improving revenues for the last 5 years. For example, there was A$25,678 million during the last fiscal year that ended June 2013, making an increase of 1.3% compared to the last fiscal year (2012). Additionally, looking at support programmes and new markets established it is noted that the scale of operation in Australia and across the border is increasing with increase in the demand for the services and products. This has not only given the company competitive advantage but also evading financial position and funding options. Subsequently, measures such as making agreements such the Definitive Agreements made with NBN Co. and the Commonwealth for its participation in the rollout of the NBN. Secondly, vertical and horizontal aspect has been captured in the analysis and with such; this study finds that the company has effectively integrated ethical decision making in service and transparency in supply management with partners and corporate world within and outside Australia. Recommendations Contrariwise, the company is also facing some critical financial situation with regard to the analyses made. Some of the derailing issues include stiff competition for the 4G service, overdependence on Australia resources, pressurised average revenue per users (ARPUs) and failing to leverage on the growth in mobile internet through launching long term evaluation (LTE) services. Based on these challenges it is projected that the company may lack significant lead in Telecommunication as a first-mover in locking in high-value customers that will give it a competitive advantage over companies such as Vodafone Hutchison Australia and Optus. Therefore the study bases the recommendation on such challenges. To begin with, it is predicted that the company is indeed experiencing decline in average revenue per users. Therefore it will be necessary for the Company to improve its unlimited voice as well as text plan so as to keep the ARPUs pressure down. Secondly, to avoid overreliance on only one country, the Company should introduce generous mobile data bundling and Mobile Repayment Options in other markets such as the China’s SouFun Sensis. Finally, the premise with which the company’s challenges lie is on the demand of cloud computing. References Aras, G. & Crowther, D (2009). Global Perspective on Corporate Governance and CSR. Farnham: Gower Pub. Baigh, H. (2013). Seven Strategies for Simplifying Your Organization. Harvard Business Review. Retrieved from http://blogs.hbr.org/2013/05/seven-strategies-for-simplifyi/ Bardoel, A. (2012).Tool or Time Thief? Technology and the Work-Life Balance. Retrieved Cole, K. (2012). Management: Theory and practice. Australia: Pearson. Corporate Social Responsibility Report (2013): Understanding the Definition of Corporate SocialResponsibility: http://www.telstra.com.au/abouttelstra/download/document/csr.pdf Daley, J., McGannon, C., & Ginnivan, L. (2012). Game-changers: Economic reform priorities for Australia. Melbourne: Grattan Institute from The Conversation, Future of Work: https://theconversation.edu.au/tool-or-time-thief-technology-and-the-work-life-balance-8165 Hamlin. R. (2002) Towards a Universalistic Model of Leadership: a comparative study of Britishand American empirically derived criteria of managerial and leadership effectiveness. Working paper WP005/02, University of Wolverhampton. Hooper, A. and Potter, J. (2006) The Business of Leadership. Aldershot: Ashgate Publishing Company. Hubbard, G. (2008). Strategic management: Thinking, analysis, action. Australia: Pearson. James, K. and Burgoyne, J. (2001) Leadership Development: Best practice guide for organisations. London: Council for Excellence in Management and Leadership. Johnson, G., Scholes, K., & Wittington, R. (2011). Exploring Strategy: Text & Cases. (9th ed). London: Prentice Hall. Katzenbach, J. and Smith, D. (2005) The Wisdom of Teams. New York: Harperbusiness. Millmore, M. (2007). Strategic Human Resource Management: Contemporary Issues. Harlow: Financial Times, Prentice Hall. Peng, M. (2014). Global Strategy (3rd ed.). Mason, OH: South-Western Publishing. Perren, L. and Burgoyne, J. (2010) Management and Leadership Abilities: An analysis of texts, testimony and practice. London: Council for Excellence in Management and Leadership. ResearchMoz. (2013). Australia - Telco company profiles - Telstra, Optus and Vodafone. Retrieved from http://www.researchmoz.us/australia-telco-company-profiles-telstra-optus-and-vodafone-report.html Rodgers, H., Frearson, M., Holden, R. and Gold, J. (2003) The Rush to Leadership. Presented at Management Theory at Work conference, Lancaster University, April 2003. Schermerhorn, J., et al. (2014). Management (5th ed.). Australia: Pearson Schermerhorn, J.R., Davidson, P., Poole, D., Woods, P., Simon, A., & McBarron, E., (2014). Management (5th ed.). Australia: Pearson Senge, P., et al. (2007). The dance of change: The challenges of sustaining momentum in learning organizations. London: Nicholas Brealey Publishing. Telstra Environmental Guidance Document (2013). A Document to Provide Guidance to Staff on Environmental Policy, Strategy, Systems and Processes. http://webcache.googleusercontent.com/search?q=cache:VTvZ80TwI0oJ:www.environment.gov.au/cgibin/epbc/epbc_ap.pl%3Fname%3Dshow_document%3Bdocument_id%3D40049%3Bproposal_id%3D5588+&cd=1&hl=en&ct=clnk&gl=au&client=firefox-a Read More