Discuss about the Communication and Attention Dynamics System.
Strategic management deals with setting organizational objectives, assessing competitive environment, assessing international environment, evaluating strategies and ensuring smooth business operation of the organization (Ethiraj, Gambardella and Helfat 2018). This study will evaluate strategies and internal and external key challenges associated with the business of Telstra. Telstra is the leading telecommunication company of Australia offering internet service, fixed line and telecommunication line, network service, data service and Pay TV (Telstra.com.au 2018). The study will assess the value chain of the organization. The will assess the business strategies of the organization in terms of its external and internal key challenges. Based on the assessment of the challenges, the study will provide suitable recommendation for Telstra for business high level of business success.
Inbound logistic is associated with receiving, storing and distribution of raw materials used in the production process. Moreover, this process is about inbound movement of raw materials from the suppliers to the manufacturing units, warehouse and any other retail store. Bettis et al. (2015) pointed out that Telstra gets supply of network equipments, electronic equipments, Spectrum, IT hardware, servers and others from the unique suppliers of Australia. The organization has set guidelines and principles for the suppliers for getting supply of standard network equipments. Apart from that, the organization uses truck, bus, ship and drones for getting supply of materials on their production unit.
The activity of operation is concerned with management of process, which converts the inputs into desired outputs. Moreover, in this stage, the raw materials supplied from the suppliers are converted into final products. According to Ethiraj, Gambardella and Helfat (2017), Telstra performs in-house operation for setting network services, data services and mobile telephony. Moreover, the operation of the organization integrates seamlessly with the existing process and works compatibly with the IP devices from various vendors. It maintains constant innovation and end-to-end process management for effective operation.
Outbound logistic is related to the process of storage and movement of the final products and related information flows from the production unit to the end users. Moreover, this process is associated with distribution of final products to the consumers. Shafei and Tabaa (2016) opined that Telstra transports its service to whole Australia and some of the selected products and services are even offered to international countries like Japan, Singapore, India, China and others. The products and services of the organization are offered to the customers through retail channels, distributors, personal stores and online medium.
Marketing and sales deals with selling of products and services towards communicating, creating, exchanging and delivering offerings, which have high level of values for the customers, clients and society. It includes promotions, advertisement, distribution channel, sales-force organization and management of final products to reach at its appropriate final consumer groups. The sales volume of Telstra accounts for about 60% in its domestic market and rest of the sales volumes are relied on international sales (Hsu and Prescott 2017). The unique branding message and promotional strategies have helped the organizations towards being unique in the market.
Services include the activities needed for keeping the products and service work effectively for the buyers after it is delivered or sold to the customers. Moreover, the intensions of such services are to maintain the performance level of the products and services, which incorporates like activities like installation, maintenance, training, warranty, repair and after-sales-service. Lu et al. (2014) opined that Telstra effectively manages its customer service practices through online chat. The service staffs of the organization also provide effective after sales services to the customers.
Firm Infrastructure deals with the organizational structure, its planning, management, finance, accounting and quality control mechanism. As per Rahman et al. (2015), all departments of Telstra like management, legal, finance, accounting and others are operational. The organization has innovative R&D centers for producing innovative telecommunication services. The organization invests significant investment in sourcing unique network equipments having adequate finances.
Technological development is highly significant for the research and development stage and leading process automation in organizations. It deals with the equipments like software, hardware, technical knowledge and procedures required transforming organizations’ inputs into required outputs. Makwana, Sharma and Arora (2014) stated that being an effective telecommunication company, the organization applies advanced technologies in the procurement process, promotional process and product delivery process.
The activities associated with human resource management incorporate hiring and retaining proper employees for helping, building and marketing the products and service. In case of Telstra, the organization is highly focused on hiring and retaining talented employees for leading innovative products and services. However, the organization does not provide adequate training to the employees for upgrading their skills and capabilities for enhancing their capabilities.
Procurement deals with the way in which raw materials of products are obtained from the suppliers. In case of Telstra, the organization sources its network equipments from around 4800 suppliers and in the last financial years, the organization purchased products and services of $6.5 billion from the suppliers (Nelson et al. 2017).
Business strategic level can be based either on a single business level strategy or on several business level strategies. The core competency in business strategies are based on the strategies adopted by the management. Certain issues such as people satisfaction of needs, service of people and the manner in which the needs of the people can be satisfied are to be mitigated so that a proper corporate strategy can be formulated. Managers need to ensure that relationships with customers are made by analysing three factors that affect the growth of a business. These include the reach of a business, its richness and the affiliation it has in the market.
Telstra has managed to employ a cost leadership strategy that helps the company in engaging in the satisfaction of the customers. The products made available to the customers are provided at a low rate so that the company can gain a competitive advantage. It provides discounts to the customers so that it can continue its production and maintain the loyalty of the customers. According to Hsu and Prescott (2017), the discount provided helps in the reduction of the cost of supply chain and help in increasing the possibility of saving excess expenditure. Therefore, due to this strategy Telstra manages to create a low-cost position in the market along with the quality of the products manufactured by the company.
At the same time customer, value proposition is created through the delivery of high quality product in the market. The prices provided are affordable and after comparing with the competitors, it can be said that Telstra ranks in the top of the marketing matrix. At the same time Telstra as one of the business level strategy undertakes differentiation. The core competency of Telstra is based on the branding and promotional strategy so that the stimulation of value and the potential of customers can be understood. Telstra has undertaken this concept by creating a perceptual image that is filled with quality and reasonable prices. It has been seen that customers have made a positive relationship with Telstra owing to the uniqueness of the service provided by the company and the development of the supply chain.
Telstra has also adopted customer focus as a part of a differentiation strategy for market implementation. Telstra locates a particular segment and ensures that plans are made based on the activities of the segment. This can be considered as one of the successful strategies that are undertaken by the company (Kenworthy and Verbeke 2015). This has provided the company with a sustainable competitive advantage as the application of a combination of two business strategies have helped in the domination of the company in the market.
In the case of Telstra, the needs of the customers must be related to the features of the product or service. The desires of customers are represented based on the features and capabilities that the products of Telstra serve. At the same time, Telstra uses core competency to serve the value creating strategy of the firm. The target marker of Telstra is broad and narrow based on which the company formulates the corporate strategies. The development of the market and product can help Telstra to create diversification in the market.
The corporate strategy used by Telstra is a diversification strategy as a part of planning for gaining a competitive advantage in the market. The level of diversification ranges from low to moderate level that is linked with the diversification strategy adopted by the company. According to Lu et al. (2014), diversification results in the increase of profits and avoids the occurrence of loss in the market. An effective management system can help in increasing the logistics of the company and at the same time ensure that vertical integration is taken into account.
The business strategies of Telstra are highly affected by the political factors of Australia. Moreover, political stability of the Australia is highly favorable for the business strategies of the organization. According to Shahiduzzaman and Alam (2014), Australian government is extremely concerned with development and growth of telecommunication service sector. Hence, the organization always gets support of government towards launching any new telecommunication services in the country. Free trade regulations and flexible tariff rates imposed by government has helped the organization in expanding its selected products and services to international markets (Thaichon, Lobo and Mitsis 2014). However, the revised wage regulations and increase minimum wages set by Australian government is increasing the overall cost of managing human resources.
Telstra has high potential of gaining huge return on investment with the increasing economic growth rate of Australia. However, the exchange rate and economic stability of international countries impacts its international business strategies in terms of gaining international business profit. Gray, S., Harymawan and Nowland (2016) pointed out that the unemployment rate of Australia has been dropped unexpectedly from 5.6% to 5.4% in the year 2018. With such declined unemployed rates, Telstra is going to face issues in hiring top talents from the job markets at lowest cost. Moreover, the organization is going to face highly cost for its hiring strategies.
Increasing inclination of the Australians towards using internets and mobile services has made the sales strategies of Telstra smooth. Moreover, the tech SME culture of the organization has promoted the local business growth of the organization in Australia. On the other hand, Hossain, Hecimovic and Choudhury Lema (2015) opined that with increasing economic growth, the per capita income of Australians have increased a lot. In this way, increasing economic growth has ultimately increased the purchasing power of the customers. Hence, Telstra can even charge premium prices for their premium products and services.
Telstra has been a technology driven company, which always focuses on latest technology for keeping them updated with the new technological changes. However, though Telstra has launched its 5G network services in Australian market, still it has not been get such success in the market. The slow National Broadband Network (NBN) speed has affected the business success of the organization (ABC News, 2017). Such slow network has affected the customer retention strategy of the organization.
Strict anti-trust laws imposed by Australian Government impacts on the promotional strategies, product strategies and pricing strategies of Telstra in terms of offering products and services to the consumers in fair manner (Garrone and Zaccagnino 2015). Complex telecom regulatory laws of the country often impact on the business strategies of the organization.
Telstra is highly focused on indentifying and minimizing environmental impacts of materials and operating costs. However, the organization should provide more focus on producing energy saving battery system for saving the energy level.
It is quite costly for the new entrants to enter in the industry of telecommunication. Hence, the new entrants face extreme pressure in entering in the industry having huge cost requirement. Apart from that, new entrants often face huge complexity in entering into dynamic industry, where the reputational companies like Telstra has already set their standard in the market. Moreover, Bettis et al. (2014) stated that huge innovation capacity and huge spending on R&D department help the organization to invent innovative telecommunication product and service preventing new entrants to compete with them. Hence, Telstra faces less threat of new entrants.
Industry profitability is always likely to suffer, when new products and services meets the similar needs and demands of the customers. In case of Telstra, it has substitutes like Dropbox and Google Drive. Such products are just the substitutes of storage hardware drives. Furthermore, Durand, Grant and Madsen (2017) opined that the threats of substitute products are highly inclined to be high, when they associated with unique value. Such substitute products having unique value can established their unique identification in the industry. Telstra faces moderate threat of substitute in the industry. The organization is trying to give more focus on its service oriented strategies than just product oriented strategies for beating such threats.
Telstra is facing huge competitive threats from the major market players of telecom industry of Australia. Moreover, the competitors like Optus, Vodafone and Virgin Mobile are also proving same types of telecom products and service even with better price and quality (Garrone and Zaccagnino 2015). Such competitors have also become able to grab large market share in the market of Australia. In this way, Telstra is facing high level of competitive threat from the competitors in telecommunication industry. Affordable pricing helps Telstra in beating such competitive pressure in the industry. Apart from that, enhanced product and service portfolio also can also help the organization in beating competitive pressure.
Telecommunication companies are to get supply of several raw materials from different suppliers in the market. However, sourcing unique supplier supplying high quality raw materials can be a challenge for the telecommunication companies. Hence, such suppliers in the dominant position of telecommunication industry can use their negotiating power for extracting higher prices for the raw materials provided by them (Mitchell and Leiponen 2016). Hence, Telstra is facing high bargaining power of suppliers in telecommunication industry. However, the organization always takes initiatives towards establishing warm relationship with multiple suppliers for overcoming the bargaining power of suppliers.
The customers are always inclines to get best offerings with affordable price. Such demand of the customers put huge pressure on Telstra in their pricing strategy. Such powerful customer sections have created high level of bargaining power on the organization. Hence, the organization has been forced to adopt competitive pricing for offering their products and service with increasing bargaining power from the buyers.
While concluding the study, it can be said that favourable Australian trade regulation helps Telstra towards developing its business. However, increasing minimum wage rate is hampering the remuneration strategy of the organization. With declined unemployment rate, the organization is facing tough challenge in hiring top talents at lowest cost. Telstra is facing tough competition from Optus in Australia market. It is hampering the organization towards grabbing adequate marketing share. Furthermore, increasing competition has also increased bargaining power of the customers on the organization. While assessing the weaknesses of Telstra, it can be seen that the organization has limited expansion in global markets leading to limited profitability. Furthermore, the organization is also facing tough competition in Australian market from the major players of telecommunication companies. Dynamic technological change in the market is also hampering the success level of the organization. Hence, the organization should immediately focus on expanding its markets for having better profitability and business success.
Telstra should focus on international expansion for leading high level of business success and to overcome various international and external challenges. Till now the organization is limited to some of the international countries and offer some selected products and services. Now, the organization should expand in some more international countries for having market expansion. In this strategy, the organization would be able to avoid the tough domestic competition from the major market players of Australia. In would also enhance the scope of the organization towards enhancing its global market share. In this way, international expansion would provide flexible business market for enhancing its business profitability. Moreover, this strategy would be direct linked with the opportunities for the organization towards having market growth. International expansion provides a chance of the organization towards conquering new territories and reaching new customers. The organization would get access to large customer base, which would ultimately result in increased sales volume. Hence, the organization would gain access to new market opportunities through huge customer base.
From the external challenge analysis, it has been found that decreasing employment rate of Australia has tightened the job market. Hence, Telstra is facing huge challenges in hiring top talents at lowest cost in this country. In such situation, the organization should expand in some developing countries for international expansion. In such countries, the job markets would be loosening. Hence, it would be possible for the organization to access top talented human resources at lowest cost in such countries. In this way, it would reduce the overall organizational cost of the organization. The organization can also use international markets for introducing innovative products and services. Such innovation would be directly linked with the positive revenue stream of the organization. International expansion would provide the organization the opportunity of having access to new technologies and industry opportunities. In such market, innovation of new products and service would provide high level of competitive advantage to the organization.
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