HA3032 - Assignment on Auditing

Running head: BUSINESS RISK ANALYSIS REPORT
Business Risk Analysis Report
Name of the Student
Name of the University
Author’s Note

1BUSINESS RISK ANALYSIS REPORT
Executive Summary
The main aim of this report is to analyze the various business aspects that can cause business
risks in the companies. For this report, Telstra Corporation Limited is taken into consideration.
Various steps of this report show various aspects of the analysis. As a part of the external
environmental analysis, PEST, SWOT and Porter’s Five Forces analysis is taken into
consideration. From the above analysis, it can be seen that various external as well as internal
environmental factors affect the operations of Telstra.

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Table of Contents
Introduction......................................................................................................................................2
Part 1: Nature of Entity....................................................................................................................2
Part 2: Industry Report.....................................................................................................................3
Part 3: Legal Environment...............................................................................................................5
Part 4: Objectives and Business Risks.............................................................................................5
Part 5: External Environmental Analysis........................................................................................6
PEST Analysis.............................................................................................................................7
Porter’s Five Forces Analysis......................................................................................................8
SWOT Analysis.........................................................................................................................10
Part 6: Performance Analysis........................................................................................................12
Part 7: Management and Governance............................................................................................16
Conclusion and Recommendations................................................................................................16
References......................................................................................................................................18

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Introduction
In the twenty-first centuries, development in business organizations is a major topic. It
can be seen that businesses all over the world are growing and developing in a fast pace. In this
situation, it needs to be mentioned that the businesses all over the world are confronting with
different kinds of internal as well as external business environmental factors that are causing
various business risks (Hitt, Ireland and Hoskisson 2012). Thus, it is responsibility of
organizational managers to take into account all these internal as well as external business
environmental factors at the time to develop the risk mitigation strategies of the companies. This
particular process leads to the thorough analysis and evaluation of all the major business risks
factors. The present study takes an honest attempt to analyze and evaluate various risk factors of
the Australian telecommunication industry. Telstra Corporation Limited is considered for this
report. Telstra is the leading telecommunication and technology company of Australia catering
the telecommunication needs of the Australians. There are several steps of this report. This report
takes into account the company analysis of Telstra along with the telecommunication industry
analysis. In order to measure the effects of external as well as internal environmental factors,
three major tools are used; they are PEST analysis, SWOT analysis and Porter’s Five Forces
analysis. In order to measure the financial performance of Telstra, some major ratios are taken
into consideration. These are the major parts of this report.
Part 1: Nature of Entity
Telstra Corporation Limited is one of the major telecommunication companies of
Australia. The company was founded in 1975 and its headquarter is in Melbourne, Australia. The
major products of Telstra are fixed line and mobile telephony; internet and data services;

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network services, Pay TV and others. Telstra operates majorly in Australia, but it has global
presence (telstra.com.au 2017). From the 2016 annual report of Telstra, it can be seen that
Telstra has published well-developed Balance Sheet and Cash Flow Statement. From the 2016
balance sheet of Telstra, it can be seen that the amount of total current assets is higher than the
total current liabilities. This aspect is a good indicator of the strong liquidity position of Telstra.
Apart from this, it can be seen that the total amount of non-current liabilities is more than total
amount of equity. This is an indicator of the firm’s large dependency on term loans instead of
equity (telstra.com.au 2017). From the 2016 cash flow statements of Telstra, it can be seen that
Telstra has some specific financing activities; they are income from borrowings, payments of the
borrowings, repayments of leases, buy-back of shares, purchase of shares, payments of financial
costs and others. Cash flow from investing activities includes payments of PPE and intangible
assets (telstra.com.au 2017). As per the disclosing activities of Telstra, it needs to be mentioned
that the financial reports of Telstra is prepared on the basis of Australian Corporation Act 2001.
Telstra also follows the guiding principles of Australian Accounting Standard Board (AASB)
(telstra.com.au 2017). It needs to be mentioned that Telstra is also known for its Corporate Social
Responsibility (CSR) activities. In Telstra, Community Relation Group of Corporate Relations is
responsible for the management of CSR activities. The CSR activities of Telstra covers wide
areas like the community, environment, workplace and marketplace (telstra.com.au 2017).
Part 2: Industry Report
Australian telecommunication industry is one of the major industries in the country. Due
to increased competition and saturated nature, the growth rate of Australian telecommunication
industry is very low. In the year 2016, the growth rate of the Australian telecommunication
industry is 0.1%. In addition, the total amount of revenue in 2016 was AUS $43 billion. More

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than 2042 businesses operate in the Australian telecommunication industry. In addition, around
50,000 people are employed in the Australian telecommunication industry (ibisworld.com.au
2017).
Figure 1: Market Share of Australian Telecommunication Industry
(Source: ibisworld.com.au 2017)
From the above figure, it can be seen that most of the market share in the Australian
telecommunication industry is for Telstra. Thus, it can be seen that Telstra is dominating the
Australian telecommunication market as it is holding almost 50% market share. However, it has
been forecasted that there will be moderate growth in the Australian telecommunication industry
in the near future. From the above graph, it can be seen that the major players in the Australian
telecommunication industry are Telstra, Optus, Vodafone and others (budde.com.au 2017).