Strategic management involves setting up goals and objectives to give directions to business firms. It also assists in formulating plans and strategies to achieve goals (Aaker & McLoughlin, 2010). Strategic management also involves understanding the environment in which a firm functions, so that plans can be formulated to conduct business in the given environment.
Telstra is an Australian company functioning in the telecommunication sector. The company specialises in telecommunication products like voice, internet data and pay television (Telstra, 2018). Prior to 1975 telecommunication sector in Australia was controlled by the Government and was run by Australian telecommunication commission (Telstra, 2018). However, post 1989 the commission was renamed Telstra and was fully privatised by 2006.
Telstra functions in the telecommunication industry which is highly competitive and technologically intensive (Telstra, 2018). Telecommunication industry has a high growth potential as most of the population uses telecommunication services (Telstra, 2018). Therefore, Telstra also has a high growth rate with a 51% market share.
An assessment of the general environment in which a firm functions helps in ascertaining the factors which influence business (Hoffman & Bateson, 2010). This also helps in planning strategies. (Bamford & West, 2012). Following is the assessment of general environment of Telstra.
Political/ Legal- telecommunication sector is promoted by the political system in Australia and was earlier Government controlled (Telstra, 2018). Now the sector is privatised but Government clearance is required to set up a new business (Government of Australia, 2018). Telecommunication sector and hence, Telstra’s business is regulated by Australian Communications and Media Authority (ACMA) (Government of Australia, 2018). The authority has regulations in place for restriction on spam and promotional calls along with do not disturb system (Government of Australia, 2018). Other regulations affecting the business are customer safety and privacy norms and labour acts like anti-discrimination and work health and safety regulations (Telstra, 2018). Hence, political and legal system offers good growth opportunity to the company.
Economic –Telecom services have a huge and growing demand due to large innovation in information and communication services (Robbins, 2013). Customers and businesses alike require telecom services. Therefore, there is huge growth potential in the economic sense in this sector for Telstra. (budde.com.au, 2017).
Sociocultural-digital devices have become a thing of fashion and a status symbol for the youth and the young professionals. This is increasing the need for better and effective telecommunication services. (Telstra, 2018). Moreover, there is peer group influence for brand choice of data services. Therefore, Telstra needs to pitch its product in an appealing way to the youth.
Technological- telecommunication industry is highly driven by technology (Telstra, 2018). Sophisticated technology is required by Telstra for setting up new communication towers, hosting servers and further innovation and research (Robbins, 2013). Therefore, investment in new technology is essential for the firm.
Global- Telecommunication industry is expanding globally. There is large scale global demand for telecom services. This industry is growing a at a huge pace which is a good sign for a lot of companies in this sector (Aaker & McLoughlin, 2010). Telstra also has the ability and technology to cash in on the global demand for telecommunication network.
Physical environment- physical environment comprises of all tangible elements of a business (Payne, 2012). Telstra provides services. Therefore, its product is intangible and inseparable from the service provider (Lovelock, 2012). However, in terms of physical elements it has servers, communication towers, offices and galleries from which it sells its product (Telstra, 2018). The firm has a powerful and well-connected infrastructure which forms its physical environment.
Demographic environment- telecommunication sector has customers from all types of demographics (Robbins, 2013). All genders, income groups and adult age groups require data and voice services these days (Kumar & Debnath, 2015). Therefore, Telstra has a huge growth potential in all kinds of demographic patters in the global market place.
Hence, it can be said that, environmental analysis allows a firm to analyse the external environment and formulate strategies to work with in this environment.
Industry environment assessment tries to find out how a company manages with in the industry specific factors (Aaker & McLoughlin, 2010). Following is industry analysis for Telstra-
Supplier power- firms in telecommunication industry have a heavy dependence on suppliers for maintenance of servers, clouds severity and raw material required for wired and wireless communication system (Telstra, 2018). Therefore, supplier power is high in this industry.
Buyer power- telecom sector is highly competitive due to its high growth potential (Telstra, 2018) Hence, the customers have a lot of choice in terms of selection of telecom providers (Armstrong, 2012). However, providers with high speed and service quality are few in number. Therefore, customers tend to stick to the chosen service provider. Consequently, buyer power is moderate.
Substitute products- telecommunication with data and wireless network is the latest in fashion and technology (Robbins, 2013). The major substitutes are fixed lines and postal services which are fast going out of fashion. Therefore, threats from substitutes are low. It can also be inferred that there are no close substitutes to telecommunication services.
Rivalry among existing firms- telecommunication is a highly growing industry. Hence, there is large number of firms in the industry with fierce competition (Telstra, 2018). Homogeneity of services also lead to less product differentiation (Hoffman & Bateson, 2010). This leads to customers perceiving different products as similar within the telecom sector. Hence, rivalry among existing firms is high.
Through an assessment of industry specific factors Telstra can make strategies to survive and grow with the industry.
As the telecommunication sector is a highly growing sector and entry barriers are moderate, there is tough competition among the firms (Czarnecki, 2017). However, the market is oligopolistic and dominated by few firms due to high technology and research costs (budde.com.au, 2017). A few firms competing with Telstra in the market are Optus, Vodafone, and Virgin Mobile. Rivalry is very high in this small oligopolistic group of companies (Telstra, 2018). All of them try to give high speed data and quality voice network. Most important competitor is Vodafone which has an international presence and massive marketing research power and technology (budde.com.au, 2017). Optus is another major competitor. This firm also has good technical skills, staff and network coverage. Their major strategies are to focus on quality and good Customer service (Kumar & Debnath, 2015). The high-quality product offered by these companies pose threats of inducing customer switching. They can also outsmart Telstra by having an edge in marketing and advertising practices.
Opportunities and threats analysis help in understanding what potential gains and difficulties are there for the firm in a given industry (Bamford & West, 2012). To function well in the industry a firm must consider its opportunities and threats. This can help a firm like Telstra in formulating better strategies. (Henry, 2011). Following is an opportunity and threat assessment of Telstra.
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Opportunities · Large growth opportunity as mobile handset and digital devices industry is booming · Aspirations of people for high speed internet is rising which Telstra can provide · Emerging markets offer huge growth opportunity as aspirations of people are rising in these economies · Telstra has tied up with Samsung the global leader in mobile technology. This has opened a new opportunity of growth in customer base. |
Threats · Some competitors like Vodafone are giving low cost plans which can lead to customer switching · Marketing cost is very high which can hamper service quality · As service is homogenous there is low differentiation and uniqueness. |
Table -1: Source Made by Author (2018) Adapted from Telstra, (2018)
It can hence be deduced that, through an analysis of its opportunities and treats, Telstra can formulate and implement strategies for removal of threats and further growth.
A firms’ internal functions are important for proper management of operations and sales (Aaker & McLoughlin, 2010). Telstra is well endowed in terms of resources. The firm has an able, skilled and well qualified manpower. Employees are very important to a service firm because they are the ones who help the customer in getting the service (Hoffman & Bateson, 2010). Another major resource of the firm is its well-established research team (Telstra, 2018).
Telecommunication is extremely technology intensive; hence, research and innovation can go a long way in improving sales and revenue (Aaker & McLoughlin, 2010). The firm has well designed infrastructure in term of telecommunication towers and servers which help in quality service delivery (Telstra, 2018). Good technology and well-maintained infrastructure are pivotal to quality service delivery for Telstra (Alkhafaji, 2013). Additionally, marketing and sales team of the company is very efficient. This helps in prompt customer support and query resolution (Telstra, 2018) Another major resource is the customer service which helps in establishing good customer relationship for the company. Therefore, the firm has well endowed resources and it using them to its advantage.
In business terms capability is the ability of a business organisation to deliver what it has promised to the customer (Alkhafaji, 2013). Telstar has promised quality service delivery to its customers. Hence, it is important to assess whether Telstra is capable of delivering its promise or not. not.
The firm has highly capable technical staff to handle telecom service delivery process (Telstra, 2018),The firm also has sophisticated reengineering and innovation process, which increases the farm’s capability to deliver quality services (Telstra, 2018). With the help of its research and innovation capability, the firm can build sophisticated telecommunication towers, wireless systems and host servers (Czarnecki, 2017). The firm also has capable research and development wing which assists it to keep abreast with changing communication technology (Telstra, 2018).
The firm has been in the Australian telecommunication business since a long time. This has improved its financial position (budde.com.au, 2017). Therefore, the firm has financial capability to invest in further research. This can help Telstra in spending on higher quality infrastructure. Better infrastructure will in turn improve service quality (Telstra, 2018).
Additionally, Marketing capability of the firm is also high and it has a capable human resource department which helps in effective recruitment, selection, training and employee development. This is because it has a long-standing experience in the telecom sector which makes it recognizable as good and quality-oriented brand (Telstra, 2018). Therefore, with the help of its capabilities the firm is able to function effectively in the telecommunication sector and deliver services as promised to the customer.
Core competencies of a firm are those resources or capabilities which differentiate a firm in the market (Hill & Jones, 2012). Management philosophers, C.K. Prahalad and Gary Hamel have analysed capabilities and resources orientations of firms and have come up with tests to assess whether a capability is a core competency or not (Hitt, et al., 2014). According to these thinkers a capability is a Core competency if-
Thus, it can be said that a capability which exhibits any of these virtues, then it can be called a core competency.
Telstra has various capabilities which can be tested on these grounds for being a core competency. Telstar has excellent technology and well-designed infrastructure of service delivery (Telstra, 2018). This give Telstra competitive advantage and provides a way to enter new and potential markets, Therefore, its technology is its core competency.
The firm has excellent human resource which can provide good service quality; hence, giving benefit to customers and increasing their perceived value from the product (Telstra, 2018). Therefore, Telstra’s human resources are its core competency.
The firm also has financial strength which helps in expenditure on marketing and research of its products (Telstra, 2018). This creates the competency of competitive advantage and enhances perceived value benefit of the customer (Telstra, 2018). Hence, financial strength of the company is its core competency. Therefore, Telstra has various core competencies which helps it in growing in the market.
An information system is a software which helps to organise and analyse data (Beynon-Davies, 2016) There are various types of information systems designed by IT developers to enable a firm in its data analysis. One of them are executive support system which helps the management in making strategies. Another one is decision support system which allows users to reach a decision (Beynon-Davies, 2016). However, the most popular is management information system or MIS which processes internal sources of information and generates timely and structured information to so that managers and other users can make decisions and policy changes.
Management information system is recommended for Telstar to manage its business functioning, information and decision-making process. Management information system can be created and programmed for Telstra in such a way that it generates reports on financial, marketing and operational aspects of business. This will help managers to take desertions and formulate adequate strategies (Beynon-Davies, 2016). This would meet the business needs of Telstra and help the firm in analysing its competitors and customers in a better way (Beynon-Davies, 2016). MIS can assist strategic planning through control and evaluation of strategy implantation process. It can help in management control and evaluation process. Therefore, MIS is a suitable information system for Telstra.
Telstra has shown remarkable growth and has survived in an extremely demanding and competition ridden industry (Telstra, 2018). MIS as a proposed information system will assist the firm in important strategic decision-making skills. MIS would enable the managers by helping in a number of ways like query handling, decision support, information generation, creation of modelling for new changes etc,
Following are the recommendation for setting up and implementation of MIS
The MIS system will help Telstra in accurate and fast decision making.
Conclusion
Business strategy can be managed through adequate analysis of internal and external environment. Such analysis can help Telstra in gaining competitive advance. Strategic planning can be assisted through management information system. This system can help implementation and control of these strategies.
References:
Aaker, D. A. & McLoughlin, D., 2010. Strategic Market Management: Global Perspectiv. New Jersey: John Wiley & Sons.
Alkhafaji, A., 2013. Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. New York: Routledge.
Armstrong, G., 2012. Marketing: An Introduction. New Delhi: Pearson Education.
Bamford, C. E. & West, P. G., 2012. Strategic Management : value creation, sustaínability, and performance. New York: Cengage Learning.
Beynon-Davies, P., 2016. Information Systems Development: An Introduction to Information Systems Engineering. Montgomery: Macmillan International Higher Education,.
budde.com.au, 2017. Australia – Telecoms Market Analyses – Top Trends Moving into 2017. [Online]
Available at: https://www.budde.com.au/Research/Australia-Telecoms-Market-Analyses-Top-Trends-Moving-into-2017
[Accessed 8 May 2017].
Czarnecki, C., 2017. Reference Architecture for the Telecommunications Industry: Transformation of Strategy, Organization, Processes, Data, and Applications. Berlin: Springer.
Government of Australia, 2018. Licencing and Regulation. [Online]
Available at: https://www.acma.gov.au/Industry/Telco/Carriers-and-service-providers/Licensing/telecommunications-licensing-and-regulation-carrier-licensing
[Accessed 8 May 2017].
Henry, A., 2011. Understanding Strategic Management. Oxford: Oxford University Press.
Hill, C. & Jones, G., 2012. Strategic Management: An Integrated Approach. New York: Cengage Learning.
Hitt, M. A., I. D. & Hoskisson, R., 2014. Strategic Management: Concepts: Competitiveness and Globalization. London: Cengage Learning.
Hoffman, K. & Bateson, J., 2010. Services Marketing: Concepts, Strategies, & Cases. London: Cengage Learning.
Kumar, A. S. & Debnath, R. M., 2015. Analyzing customer preference and measuring relative efficiency in telecom sector: A hybrid fuzzy AHP/DEA study.. elematics and Informatics Journal, 32(3), pp. 447-462.
Lovelock, C., 2012. Services Marketing : People, Technology, Strategy. New Delhi: Pearson Education India.
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