Telstra: Harnessing Drivers Of New Economy

Overview of the Company

Innovation in technology has become a primary driver of the evolution of the communication sector, underpinning increased consumers empowerment, the need for investment in communications infrastructure, as well as changes in dynamics of the marketplace. The consumer demand for an increasingly converged communications service has driven competition in the marketplace as companies seek to innovate, as well as grow their market share of the evolving value chain. Consequently, there are strong incentives for communications marketplace players for promote rather than impede access to a complete and diverse range communications products, use and content. Telstra Corporation Ltd being a leading telecommunication company in Australia has been affected by external forces that have shaped the company’s strategies (Stuhmcke, 2002, pp. 69).

Telstra is an Australian leading telecommunication and information services, which has been operating in the information telecommunication sector since 1975.The firm provides services and it competes all through telecomm marketplace in the whole Australia and offers more than 9.6 million in fixed line in Australia besides and over 9.3 million services of mobile, which comprises 3.3 million services of 3G network. The main activities of Telstra include offering the basic access services to the majority of businesses along with homes. The services offered by the company comprise internet access, mobile, television among other services, not only in Australia, but also partnership and functionality in the global market, particularly Asia. Currently, Telstra is acting as a market leader with a market share of more than 60 percent (Cooper, 2000, pp. 16).

The technological advances in the mobile communications in Australia have played a significant role in promoting the business environment. A recent study in Australia place the total value added by the mobile sector at around $14.1 billion annually. New technologies are being embraced where competing network providers have installed progressively more sophisticated technologies with 4G being the latest, as well as novel technologies on the horizon (for example, using the 700MHz spectrum band in addition to LTE-Broadcast) (Lagkas et al., 2013, pp. 72). The economic gains of mobile technology receive equally from all of these technological developments, and Australian clients are apparently demonstrating the worth they are getting. These benefits have greatly impacted the company’s capability to adopt new mobile networks to boost its business that open up new prospects for mobile communications along with applications. Competing network technologies have well-built motivation to Telstra to attract additional demand onto these innovative networks that allows the company to tender enhanced deals to clients, like additional usage for similar price market. This has continued to boost the company’s efficiency as the market leader in the telecommunication sector (Liberg et al., 2018, pp. 17).

The economic factors include changes in the area of taxation, interest rates, economic growth, inflation, as well as exchange rates. The economic climate in Australia has been greatly by government economic policies that support private investment through offering incentives to these investors. The most common indicator for measuring nation’s economic action is gross domestic product (GDP). Thus, the current economic growth in Australia has the potential to boost the telecomm infrastructure that will promote companies in this industry. Australian economic expansion increased strongly during the primary 3 months of this year, which enhanced household use, government demand, powerful exports and an increase in business investories. According to the Australian Bureau of Statistics (ABS) the GDP augmented by 1% seasonnaly adjusted chain capacity terms, which topped forecasts for a rise of 0.9%. This was the biggest quarterly rise since the concluding quarter of 2011 (Scutt 2018, pp. 1). These increases in the country’s GDP have increased consumer spending in the use of broadband services that benefits Telstra significantly because they will have more clients.

External Environment Analysis

The telecommunication industry is characterized high competition because of the new entrants bringing competition. The telecom industry in Australia is going through a change that has attracted huge competition. The main players in the telecom industry in Australia include Macquarie, TPG, Telstra and Vodafone. The entry of TPG as the 4^th entrant as a broadband provider to the telecom market, Telstra shares sank to their lowest mark in 2017. While incumbent mobile providers Optus, Vodafone, and Telstra, there is high competition in the industry that is expected to increase in the future. The entry of new firms in the industry affects the revenues and profits of Telstra since clients will move to the new provider in expectation of new services and experiences. The competition in the sector is founded on price-point in the local marketplace that impacts firm’s financials. There has been increase in data volumes and intense competition on pricing across fixed, mobile, bundles, data, as well as IP have had an impact on Telstra in the past (Spencer 2017, pp. 1).

There is a growing demand for the need for workers for the technical sectors, such as telecommunication. The current demand for specific skills for the present resources boom in Australia is putting more pressure in the Australian workforce and economy to supply this labour. In Australia, the information media and telecommunication sector employs about 227,000 people that represents around 1.8 % of the total labour force. However, it has been reported that there is ready labour market for skilled workers in Australia that telecom companies like Telstra can tap from to boost its operations.  However, the recent statistics from ABS have shown that there is shortage of skilled employees in Australia will pose a serious challenge in the future for players in different industries that need employees with specific skills, like engineering. This is likely to affect Telstra in its quest to develop premier products and services to launch in the market for competitive advantage (Cameron 2009, pp. 18).

As clients need the modern smartphones along with other electronic devices, e-waste carries on increasing and is one of the quickest increasing types of waste in Australia. The Telstra resource environment is rich given the increasing number of people using broadband services that entails the use of phones. The increasing number of phones in Australia has become an important resource for the telecom industry because it means increasing customer base. In addition, the telecom industry is one the growing sector in Australia that presents many opportunities to companies like Telstra in promoting their products thus increasing their market share. Employees present an important resource to companies in telecom industry because they have rich expertise and will help the company to promote its innovation goals. In addition, there is a growing technological advance that presents the company an opportunity to meet its markets demands toward attaining a competitive advantage.

Customers play a primary in the success of the company towards purchasing the products of the company. The telecommunication sector in Australia has continued to attract a huge number of customers with their increasing innovation. For instance, the introduction of the 4G saw leading firms attract more customers who purchased the new products in large numbers boosting the sales of the providers in the market. This has been boosted by tailoring the products to meet the needs of the customers because customers demand high-quality products at premium prices. The customers in the telecommunication industry have stimulated companies in this industry to offer premium products at premium prices, which have ensured that these companies become creative (Labetoulle et al., 2014, pp. 687). In Australia, the growing e-commerce is pushing brands to outdo each other in offering the best digital customer experience towards meeting the expectations of the company. Therefore, customers have placed demand on companies to produce and offer products and services that meet their needs, which makes the customer the king. These customers have benefited companies in the industry like Telstra. Telstra has dominance in Australia’s marketplace with over 16 million clients that are more than its two largest rivals pooled together in the telecom industry. Optus and Vodafone have 94 million and 5.2 million in Australia respectively (Mason & Rose, 2014, pp. 1).  

Technological Environment

The Australian telecomm regulatory environment has shifted since 1997 from the tentative regulation of a managed fixed line duopoly (Optus and Telstra) to complete, as well as then since 2010 as it was in the past where there was a state-owned business (NBN Co) as a monopoly wholesale through showing some of the transformations, which are still evolving. From this time in Australia, the regulation in the telecommunication sector has been lighter and there have been few regulations that present obstacles (Nicholls, 2016, pp. 196). The legal and regulatory environment has been effective in ensuring that companies in the industry comply with environmental laws and regulations governing business operations. Telstra has not faced any legal or regulatory through prosecutions because it has been compliant to these regulations and laws. The legal framework for telecom industry in Australia contained laws that govern licensing, competition policy, quality service, penalties and sanctions. These legal frameworks have not affected Telstra’s operations because the laws are friendly to the business environment.

The global telecommunication environment is promising because of the growing innovation and emergence of new technologies that has increased the prospect of this fast growing industry. The technological advances occurring in the industry has been felt by telecom companies and those businesses, which access telecommunication networks would feel both the instant and far-reaching effects due to major trends that are currently circulate in the industry (Manner, 2002, pp. 64). The current global advancement is promising and will change the manner in which telecom companies will operates include the Internet of Things (IoT), integration with content, 5G wireless, platform-based services, cloud computing, network security and data centres. For instance, in 2015, the industry ranked 4^th in IoT spending allocating around $111 million in IoT pursuits, which shows extend the technology is giving opportunities to Telecom firms. These developments globally will revolutionize the way companies like Telstra will operate and meet the changing needs of the customers and changing business environments.

The new technological advances in Australia and beyond the borders provide an new opportunity for Telstra to expand its business and conquer more market share than at the moment. The new technologies in the telecommunication industry will likely to open doors for the company to venture into the global market to meet the changing trends and increase in demand of new technologies. The IoT offers a huge prospect for Telecomm companies like Telstra in reaching different markets around the world. Surpassing population,as well as developing new subscribes, the IoT opens will open door to novel opportunities. The problems of wastes of energy has been reported around the world and the IoT has presented unprecedented blueprint for sectors, like Telecom where Telstra operates to help resolve the problem of energy losses and waste increasing effficinecy of these companies (In Mavromoustakis et al., 2016, pp. 87).

Furthermore, it is predicted that by 2020, the IoT will succeed in making ratio between machinbe type communications to human kind communications will erach 30:1. Thus, this is important for Telstra because it will help it to extend their subscriber base from around 6 million people 50 billion subscrtibers or even more than a trillion machines and objects. Thus, this will open new doors and functions as a basis for surpass populace and develop new subscribes for the company and the greater telecomm industry. Another technology that will help Telstra expand its market size is the home networking. Home networking is a primary battlefield for network convergence of telecom, television, as well as the internet. This will allow Telstra to enter into other sectors and increase their customer base because this home networking will provide this capability (Zungeru et al., 208, pp. 39).

Economic Environment

The growth of mobile subscribers that use the broadband services will greatly boost Telstra’s market goals of penetrating the different markets in Australia, but also across the world. The number of subscribers have increased day-by-day offering prospect to the company to expand its products offering to meet this increasing in the market. The number of subscribers will offer great opportubnities to Telstra given the increasing number ofm people using theirm phones while accessing the internet. There is a changing consumer user patterns that will transform the profile of service subscriptions. Therefore, the move to mobile phone-only families carries on with around 31% or or roughly 5.78 million Australians with only a mobile phone along with no fixed-line telephone at home. Therefore, the increasing subscribers will provide an opportunity for Telstra to open more markets in Australia and other parts of the world, especially in Aisa. Asia presents a great opportunity for Telstra to expand its products that will increase its markets and increase its opportunities (Stuhmcke, 2002, pp. 69).

The shortage in the the skilled workforce in Australia and other parts of the world prompted governemnts to relook into the matter and encourage young people to join colleges to pursue engineering and technology courses. The number of graduates and students pursusing these courses have significantly increased in the last one decade. This implies that the future of the telecomm will benefit from graduates that will drive information to a greater level (Ramli, 2015, pp. 1). This offers opportunities to Telstra to continue with its innovation strategies to meet the increasing emands for its products through the input of the skilled workforce. The skilled worforce will be a considerable driver towards the company’s goals of innovation. The skilled labor force will take Telstra’s innovation to a greater level that will ensure that it captures important markets around the world with innovative products.

Competition is a huge threat to Telstra not only in Australia, but globally. The current level of competition that the company faces has resulted in decline in its profits. The new entrants into the telecomm industry have become a major threat to the company and have been forced to explore other strategies to survive the competition from well-established firms, like Vodafone and Optus. For instance, the entrance of TPG into the industry shook the operations of Telstra resulting in decline in its profits. This competition is likely to continue in the telecomm industry in Australia and globally that will continue to affect the profitability of Telstra (Arup, C. 2002, pp. 29).

There is the threat of new regulations in the telecomm industry given the growin number of players in the sector. The government regulations are likely to hamper the operations of the company towards expanding its business. The regulatory laws in overseas countries will also act as impediment to the company that is well conversant with the Australian laws and regulations (Gentzoglanis &  Henten, 2010, PP. 85).

Conclusion

Telstra has great opportunities to expand its business to overseas market. There is likelihood that soon the telecomm industry in Australia will reach its saturation point and this will affect the performance of the company. The company should explore emerging markerts around the world to diversify its operations to avoid potential risks in the future. Moreover, the company has growth potential by tapping human resources with skills in technology to boost its iinovation goals. Telstra need to continue with its investment on emerging technologies to overcome competition that is intense in the telecommunication industry.

References

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