Telstra - Environmental. Competitive, and Strategic Analysis - Case Study Example

Executive Summary Telecommunication forms a very important part of Australia. There are many providers. Some of them are Optus, AAPT, Powertel, Hutchison and many more. The industry here works on the basis of demand and supply stakeholders. The industry has been de-regulated. Government plays a very important role. This sector is getting saturated. Competition is tough. This has made people get better services. Even the environmental analysis supports it. Technological changes have added to it. “Even the slow rate of economic growth is taking its toll”. This has resulted in newer products. Telstra is the largest provider. It has the biggest market share. It has worked on its strength. This has made them develop better marketing strategies. Their competencies have been worked on. They provided service with a focus on future. This made them come with new products. Providing good service has been high on the agenda. This can be seen as their strength. The company has worked on the weakness and created opportunities. Telstra now needs to look into venturing in new markets. It needs to cater a niche market. Developing countries would be a good option. It also needs to enter into partnerships. This will help to reduce common cost. It will also give access to wider markets Table of Content Introduction 4 Environmental Analysis 5 Telecom Industry 5 Business Model 6 Governmental and Political factors 7 Technological Factors 8 Industry Factors 8 Competitive Factors 9 Competitive Analysis 10 SWOT Analysis 11 Strategic Analysis 14 Strategy 14 Target Market 15 Conclusion 16 Recommendation 17 Reference 18 List of Figures Figure 1: Structure of Australian Mobile Industry 3 Figure 2: Environmental Analysis Model 6 Figure 3: Business Model 7 Figure 4: Products offered and to be offered 8 Figure 5: Share price of Telstra 10 Figure 6: Market Share 16 Introduction Telecommunication has grown. “It forms a very important part in the Australian economy”. There are many providers. Telstra is a leader in it. Others are Optus, AAPT, Powertel, Hutchison and many more. It contributes to economy. “It makes use of all technology. Telecom service started in 1879. Since, then it has grown. It has over 9.76 million main lines. It has over 21.26 million mobiles user”. (Sina, 2008) This shows the growth. Even the environmental analysis shows how it is affected. It demonstrated the changes in technology. The way government brought about regulation. The competitors and how the industry sustained. The Australian telecom also had operators from outside. “It makes use of all forms of technology”. The government has deregulated the market. This has intensified competition. Customers benefited as a result. They got better service and cheaper rates for call. Here we see how Telstra has grown over years. “The way it was able to use technology”. The strategy it used. The way it dealt with competition. We also look at the target client. How Telstra shaped up itself. This report also presents how Telstra has done. The strategy used. It presents a future for it. It also deals how it will use all the factors to its advantage. Environmental Analysis This forms a very important task. It helps to find out how the outside factors affect the company. It considers both the micro and macro factors. This helps the company to come with strategy. It helps them grow. Looking at the overall Australian telecommunication we see that it has grown. Australian Telecommunication has been since 1879. It has grown. The number of providers has increased. This has increased competition. Customers benefit as a result of this. They are able to get better service. The switching cost is low. Each company uses most technology present. This gives customer to choose from a lot of option. The industry has all the stakeholders working together. This makes regulation good. Even supervision improves. Telecom Industry The Australian telecom mobile industry looks as follows (Troshani & Hill, 2008) Figure 1Structure of Australian Mobile Industry Here we see that “to provide good service interaction is needed between demand side and supply side stakeholders and this can be done only when the environmental is well co-regulated by the industry and the stakeholders which include the government and other association”. (Troshini & Hill, 2008) The Australian industry has this. This has made it more competitive. More providers are looking towards it. Now when we have looked at the industry we look into the other factors which affect this industry. We see how these factors affect the decision making. Some of the factors which affect the providers are shown in the chart below (Samuel, 2001) Figure 2 Environmental Analysis Model Now we look at the details below Business Model Every provider has a different strategy. Their basic aim is customer satisfaction. This is done by providing good services. Competition has caused nearly everyone doing the same thing. Their model is such that competition has grown. Every provider follows nearly the same. The model seems as follows (Troshini & Hill, 2008) Figure 3 Business Model Thus there is similarity causing in competition to intensify. Government and Political Factor “The government has deregulated the market in 1997 which has intensified competition as there has been removal of certain carrier and technology restrictions”. (McDonald, 2001) This has made providers purchase infrastructure. They are doing it from carriers. They provide it to their customer. This has resulted in market to grow at 15%. This has even made broadband a big success. This is putting pressure. Competition has grown. The recent has affected the growth. It has slowed down the progress. “This has taken a toll on every provider”. (James, 2009) The result has been such that “Primus Telecom had filed for bankruptcy and affected the balance”. (James, 2009) The effect has been such that even “Vodafone Australia and Hutchison have come in a joint venture which will lead to tariff war in the short and medium run”. (James, 2009) Investments have slowed affecting all providers. Technological Factor Change in technology has also affected competition. New technology “like broadband service which is high speed network based on optic fibers and wireless technology is developed”. (King, 2009) This is intensifying fight. Competitor has access to “mobile, landline and internet”. (King, 2009) This has leveled the playing field. “Even companies are using voice and data services”. (King, 2009) the broadband service is one all are eyeing for. Thus we see tough competition due to technology. Industry Factors Most competitor offer same products. They all are into every field. Be it mobile, landline, internet and even looking towards broadband. This brings homogeneity. Since, everyone has same thing to offer competition has grown. The chart shows it (McDonald, 2001) Figure 4 Products offered and to be offered It shows that competitors are moving into other lines. This has grown the competition. Competitive Factors Australia has a presence of many providers. This is because of the policies. Some are Telstra, Optus, AAPT, Powertel, Vodafone, Hutchison and a few more. This is causing them to follow similar schemes. A proposal by one is copied by another. This has caused “Telstra market share to reduce”. (James, 2009) It has also caused mergers like “Hutchison Vodafone are working in tandem to counter competition”. (James, 2009) This has made “it the third largest operator”. (James, 2009) This has made them a market share of 31%. This has helped them as coming together has given them wider markets. Their access and infrastructure improved. Even Optus which is second is giving good competition. Thus competitors are affecting each other’s strategy. “This has led to companies to be on their feet”. The growth rate in population is also affecting it. “The penetration level is 110% to 115% of population which seems to sustain itself despite the slow growth rate of the economy”. (King, 2009) This has given competitors to work on specific markets. This might slow down a bit but since there are many takers there is scope. Thus, we see that the environmental analysis shows tough competition. Everyone has access to information. Every provider follows suit. This is making to come with new strategies. Competitors are also eyeing specific market. This has grown competition. Competitive Analysis Telstra Corp is an Australian telecom provider. It is the largest in the country. It provides services in all fields. It provides services in “long and local calls, mobile services, dialup, wireless, and DSL and cable internet access”. (Smith, 2009) It has 9.4 million fixed line subscribers. It has 9.3 million mobile subscribers. It is also into 3G business. It plans to increase its 3G speed. It is giving tough competition. It has moved into wireless broadband. “The speed offered here is great and the plans have been designed which fulfils the needs of the customer as they can subscribe to plans which they seem feasible”. (Alex, 2005) The company even “plans to come up with faster broadband at same prices and higher data allowance”. (Thodey, 2009) This is due to competition. It is taking its toll. Companies are forced to provide additional features. This will help to retain customer. It will also get new ones. This is also seen by the fact that Telstra has done well over years. Even share price indicates that. It is shown below Figure 5 Share Price of Telstra “It shows that the company has done well”. “It has been able to use the factors to its advantage”. It has also dealt well with recession. “It has been able to keep its competitors at bay”. Now when we look at the strengths, weakness they have. It will help to identify the threats. Also the opportunities available will be found out. SWOT Analysis This helps to find out important areas. “It also helps to identify areas which need to be worked on”. Strengths Strong presence: Telstra has a strong presence. The customer base is big. It operates over entire Australia. “This has given them a chance to penetrate. They are present in even far flung areas and have resulted in covering all areas”. (James, 2009) Variety of service provided: Telstra provides a variety of service. It has its presence into everything. It provides services in “long and local calls, mobile services, dialup, wireless, and DSL and cable internet access”. (Smith, 2009) This has made more people take it. High Customer satisfaction: The services provided have high standards. They employ best professional. This has resulted in good service. Customers are satisfied. They get what they want. This can be seen by the fact that the company “plans to come up with faster broadband at same prices and higher data allowance”. (Thodey, 2009) Infrastructure: Telstra has a strong infrastructure. They are the best. They provide it to other operator. This helps them to give good service. This has made them come with new features. Technology is used to gain advantage. Strong Brand name: “Due to its presence for years it has earned a good reputation on account of the services provided”. This forces people to take it. Weakness Low revenue per user (ARPU): “The competition has forced revenue to fall. They had to give cheaper plans. This has increased burden”. “The average revenue per customer has fallen as a result”. (James, 2009) This has affected profits. Overall it has grown. But per user has been low No partnership: “All other competitors are entering into agreement where as Telstra is all alone which has affected the company as entering into partnership has forced common cost to fall and also access to larger markets”. (James, 2009) Opportunities Huge Market: Telstra has a huge market. The growth in population is adding to it. This is seen by “the penetration level is 110% to 115% of population which seems to sustain itself despite the slow growth rate of the economy”. (King, 2009) This gives scope. Making Technology accessible to all: Telstra can work on outsourcing its technology. It can use broadband to gain advantage. It has come with new and faster methods. This can be passed on. It can earn revenue from those. It can leverage and use it for advantage. Adopt latest technology: Telstra can develop more technology. This will give them more takers. It will result in bigger markets. It will make them a favorite as they already have a bouquet of service. Going global: “Telstra has an opportunity to move beyond Australia. This will increase presence. It will give new markets and a chance to increase its reach and customer base thus making them feel less pressure from the domestic economy”. (James, 2009) Threats Recession: This is affecting the economy. The growth rate has fallen as a result. People are having less money to spend. This is affecting every provider. This is more for Telstra as they have more services. Political situation: Telstra will be affected by the political situation. Since, presently there is stability there is no much worry. Recommendation We see that there is scope. “Telstra needs to go global. Even outsourcing its service like broadband will give good results. The company has a good presence. This will help them. The company can even use the infrastructure in a better way”. “They need to concentrate more on the niche markets”. “This will help them have customers form every market. It will help them. Even entering into partnership with some will help to get a wider market”. Strategic Analysis This will help to find out how the strategy helps to gain advantage. It will help to find out how the SWOT along with the strategy will help. It will help to formulate future strategy. This will help the company. Strategy Telstra has both wholesale and retail customer. It uses different strategy for both. “It sees that it does not disclose the wholesale customer strategy to other retail customers thus helping to maintain confidentiality”. (Nelson, 2006) This helps in differentiating the two. The company also provides service in bundles. They offer various feature. They see that customer gets maximum benefit at the same price. The company has a vision. This helps them to work with an eye on future. They also have presence widely. This helps them. They are able to use the strategy as per that. The company also looks for customer satisfaction. This has helped them. “Division has been set which deals with customers’ complaint and solutions are provided at the shortest time by using service quality strategy and Information equivalence strategy”. (Moyal, 2006) “The company is going an overhaul and transformation in its business model with more usage of technology and bringing people together”. (Sol, 2009) This is making major changes. “They have been able to do it well”. Thus, this strategy is helping. “They have both short and long term goal”. This has increased focus. They are able to gain advantage of it and grow. Target Market They have a wide presence. This is helping them eye every segment. They have also designed products that match the requirements of every sector. For this “Telstra is targeting business and household sector as they give maximum return on sales and marketing investment thus helping to earn good profits”. (Daniel, 2009) Telstra has worked on the “market based management approach and this has helped them capture good market”. (Mark, 2008) This has resulted in “understanding customers better than their competitor who has resulted in choosing the right target”. (Mark, 2008) This has made them concentrate on low usage customer and big spender customer. The company has chosen its market based on what it offers. It is also eyeing the niche market. They are designing product for them. They have been able to use it. Technology has been there main strength. They have designed the model to satisfy the customer. Thus we see that Telstra has been able to capture most segments. This is because of its presence. It has used it to provide customers all they want. Conclusion Australian Telecom market is thus approaching saturation. Competitors are coming with new strategies. This has made sustainment tough. Companies are using technology to develop. They are trying to come with new products. This is giving customers option. Telstra has been the market leader. It has worked on its competencies. It has made used of technology. They have provided good service. They have offered a lot of service. “The company has an eye on the future”. This is helping to come with new services. A look at the market share below also reveals that Figure 6 Market Share Thus we see that the market has very little scope. Everyone needs to be at their feet. This has made better offerings for customers. To grow now it’s important that companies look forward to outer markets. Recommendation Telstra needs to work similarly. They are market leaders. But slowly they loosing. They need to develop new ways. This will help them. Some of the strategies recommended are Work on the competencies. Telstra has been using it. With more usage it can gain market share. The company has already taken steps. It has developed faster broadband service to attract more people. This will help Telstra. Telstra also needs to move globally. It needs to explore market outside Australia. There is growth opportunity in developing markets. This will help them face different situation. Even when a market experiences downturn the effect will be low. It also needs to enter into partnership. “This will help to reduce cost. The common cost will be shared. This will help to earn higher profits”. It will also make them more competitive. They will be able to use key success factors of others. This will help. Thus, using the above strategy will help Telstra. It will get them new market. It will also help them increase share. 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