Micro-Environment Analysis and Recommendations

Running Head: MANAGEMENT 0
BUSINESS ENVIRONMENT

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Table of Contents
Introduction................................................................................................................................2
Micro-Environment Analysis and Recommendations...............................................................2
Conclusion..................................................................................................................................5
References..................................................................................................................................6

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Introduction
For any organisation, it is important to consider impact of micro and macro
environmental factors in the business environment for the success of business strategies and
practices in the long term of business life cycle. This report outlines Telstra micro
environmental impact on the company decision making process together with proposed
solutions for future strategic procedures. Telstra is one of the biggest and leading Australian
telecommunication firm offering varieties of services comprises of voice, data, broadband
and so forth. At present, the corporation has expanded its business portfolio in more than 20
nations and the net profit of the company stands out to $3.53 billion in the year 2018 (Pash,
2018). The market segment of the company is vast and some of the different micro
environmental market characteristics influence Telstra business strategies includes
competitors, consumer behaviour, suppliers, public opinion, new intermediaries and new
entrants.
Micro-Environment Analysis and Recommendations
The micro-environment of Telstra involves close entities that directly influence the
way it offers a product or service to customers and it includes these factors -
 Consumer Behaviour – Consumer behaviour forms the most significant factor in
company micro-environment. In 2013, the CEO of the company i.e. David Thodey
also stated that expectations of consumer are increasing and changing where they are
getting more informed with exponential growth in connectivity, bandwidth demand,
improved user interface, innovative applications and data analytics (Pash, 2013).
Furthermore, there is a huge market opportunity in the Asian region with the growing
middle class and rapid urbanization. In addition, half of the global internet users live
in Asia and so, their influence in the online world is only set to rise (Kaur, 2016). This
strategy will benefit Telstra to attain bigger growth with larger market share.
 Suppliers – Suppliers are responsible for providing the goods required by an
organisation to produce their products and create value for its consumers. In case of
Telstra, the management needs to continuously observe the changes in the availability
and cost of supplies and required to adjust strategies accordingly. In the Australia

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telecom industry, there is moderate bargaining power of suppliers and Telstra
purchasing spend leads a unique position to work with its suppliers while positively
impact on their social, environmental and ethical performance. To practice sustainably
for longer time, Telstra spends around $1 billion each year with Australian small
business suppliers (telstra.com.au, 2020). From future perspectives, the company can
reduce its payment terms say by 25 days in relation to its small and medium sized
suppliers with the end of the financial year and this will also prevent other big
suppliers from using supply chain financing if they desired to do so.
 Marketing Intermediaries – Market intermediaries are crucial to the ability of
Telstra for delivering value to customers. Telstra must have an ability to recognise,
enable and efficiently manage new channels or it will put themselves at risk of being
targeted and outplayed by disruptors and channel specific intermediaries that
emphasis on discovery significant weaknesses offering solutions for gaps in the
marketplace. For Telstra, some of the key market intermediaries can include their
digital marketing agency, HR recruitment agency and research and development,
division.
 Competitors – There is an intense competition in the telecom market of Australia
with major players including Telstra, Optus and Vodafone. Currently, Telstra is
functioning in an oligopoly market and each of the competitor influence one or other
through their strategic decisions. Considering an example, when a price cut is done by
Optus in 2018, Telstra also reduced its mobile plans rates in side of aggressive push
from Vodafone Australia and Optus (Mason, 2018). The others factors through which
rivals firms can influence the industry include innovation, high level of advertising
and customer analysis.
 Public Opinion – Publics are the group that plays an important role in an organisation
ability to operate effectively. Different types of public opinions include media
publics, financial publics, local publics, internal publics and general publics. Through
public opinion, the company sets a new strategy to enhance consumer experience
simplifying structure and cutting of costs. It is related with Telstra2022 and global
business services with handling of NBN, 5G and TPG (Reichert, 2018). This will
increase the business performance of company through value adding attributes and
radical transformation of customer plans and pricing to deliver improved customer
performance.

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 New Entrants in the industry – This factor in the micro environment play low threat
to the company business performance and in Australian telecom industry, there are
high barriers to entry as Telstra has successfully managed its legislative policies,
patent rights, branding, customer loyalty and scale of economies making it hard for
the competitors to stay in the competition. From future perspectives, Telstra needs to
invest more in digital and frontier technologies such as artificial intelligence, 5G
networking, block chain technology and different band in the respective targeted
segment. Ultimately, if an effective rival uses less time and money to enter into the
organisation market, the more the position of the company may greatly be weakened
(Uhlenbruck, 2017).

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Conclusion
In the limelight of above discussion, Telstra offers a complete range of services to
Australian customers as well as other market segments. However, some of the key micro
environmental factors influencing company business and financial performance in both
shorter and longer term period. The impact of these factors on the business of Telstra can be
analysed with changes in business policies, structures, revenue, market share, growth and
value-adding attributes. In relation to these, several proposed solutions also being
recommended in between benefit Telstra to plan necessary strategies to counter possible
uncertainties and threats. From future perspectives, Telstra can expand globally, mainly in
emerging markets to achieve economy of scale and attain more bargaining power on key
environmental factors such as suppliers and intermediaries.

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References
Kaur, A. (2016). Asia accounts for 50 per cent of total internet users in the world. Retrieved
from https://www.businesstoday.in/current/economy-politics/asia-accounts-for-50-
per-cent-of-total-internet-users-in-the-world/story/238589.html
Mason, M. (2018). Telstra may cut mobile prices in wake of aggressive push from Optus and
Vodafone. Retrieved from
https://www.afr.com/companies/telecommunications/telstra-may-cut-mobile-prices-
in-wake-of-aggressive-push-from-optus-and-vodafone-20181005-h1698k
Pash, C. (2013). Telstra's CEO Outlines Seven Ways Telco Consumers Are Demanding
Change. Retrieved from https://www.businessinsider.com.au/telstras-ceo-outlines-
seven-ways-telco-consumers-are-demanding-change-2013-10
Pash, C. (2018). Telstra's full year profit is down 9%. Retrieved from
https://www.businessinsider.com.au/telstra-full-year-profit-8-2018-8
telstra.com.au. (2020). Working with Telstra. Retrieved from
https://www.telstra.com.au/aboutus/our-company/supplying-to-telstra/working-with-
telstra
Uhlenbruck, K., Hughes-Morgan, M., Hitt, M. A., Ferrier, W. J., & Brymer, R. (2017).
Rivals’ reactions to mergers and acquisitions. Strategic Organization, 15(1), 40-66.