Strategic Management GSBS6060 Assignment

Strategic Management GSBS6060
Assignment 2: Group Report
TELSTRA NETWORKS & IT
Amit Bhakuni - C3315774
James Gould - C3345234
James Handford -C3110398
Jitender Singra - C3311914
Martin Gray - C3208385
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1. Executive Summary
This report undertakes a strategic analysis of Telstra, in regard to its telecommunications
network infrastructure and IT businesses. This includes an analysis of the external
environment using various models that identify the key political, regulatory and competitive
shifts that impact Telstra’s ability to achieve above average returns. It also analyses Telstra’s
internal business-level strategies and applies a number models to assess their effectiveness.
The report concludes that Telstra’s strategic objectives are aligned well with the threats and
opportunities present in its environment and leverage its existing competitive advantages.
However improvements to current organisational structure, staff culture and make-up, and
technological adoption are recommended to increase likelihood of successful implementation.
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2. Table of Contents
1. Executive Summary.
2. Table of Contents.
3. Introduction.
4. Strategic Analysis.
4.1 External Environment Analysis.
4.1.1 General Environment
4.1.2 Specific Environment
4.2 Internal or Competitive Analysis.
4.2.1 Core Competencies (Strengths)
4.2.2 Strategic Competitive advantage
4.2.3 Internal weakness
4.2.4 Discussion on internal strengths and weakness
4.2.5 Organisation competitive position in the market
5. Strategic directions and strategic objectives
5.1 Vision
5.2 Mission
5.3 Strategic Objectives
5.3.1 Ethics position
5.3.2 Stakeholder Analysis
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6 Key broad business-level and international strategies
6.1 Ansoff’s product/ market business level strategies
6.2 Miles and Snow’s adaptive strategies
6.3 Porter’s competitive business level strategies
6.4 International strategies
7 Strategic implementation: General perspective
7.1 Indication of mismatch of Environment Turbulence and Management Strategy Focus
7.2 Evidence of unrealised, unintended, imposed strategy
7.3 Evidence of strategic drift & Flux
7.4 Need for Transformational Change
7.5 Is there evidence of second curve activity
7.6 Business level strategies fit on the BCG matrix
8Strategic implementation issues
9 Strategic evaluation
9.1 Triple Bottom Line
9.1.1 Economic Bottom-line
9.1.2 Social Bottom line
9.1.3 Environmental Bottom-line
9.2 Is Organisation Achieving its set out strategic objectives?
10 Conclusion: Current and future prospects and recommendations
11 References
12 Appendix
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3. Introduction
This report will provide a strategic analysis of Telstra and how effectively aligned its strategic
objectives are to the current external environment. An analysis of the external environment
will be conducted, using Pestle, Porter’s five forces and the specific turbulence model. This
will then be followed by an analysis of Telstra’s internal strengths and weaknesses, with a
consideration of the current strategic direction that has been pursued by Telstra. The
alignment of Telstra’s strategic objectives with the interests of its identified stakeholders and
the chosen business and international are analysed, including a review of the appropriateness
of these chosen strategies. The report will then draw conclusions as to how effectively
Telstra has implemented its strategic objectives and provide recommendations to more
effectively meet the challenges of a highly competitive and dynamic environment.
4. Strategic Analysis
4.1 External Environment Analysis
PESTEL Model
Operating in an environment of rapid technological innovation and strict regulation, Telstra
is significantly impacted by external megatrends. A PESTEL model has been used to analyse
these megatrends and identified Political, Economic and Technological factors, as presenting
particular threats and opportunities to Telstra.
Key political threats include high wholesale prices for accessing NBN’s broadband
infrastructure and the merger of TPG and Vodafone, creating a large third player in the
growing 5G market. This will increase competition and place pressure in profit margins.
However, it likely reduces long-term retail competition (Pohl J., 25 Sep, 2019).
The economic and social consequences of Covid-19 has led to a growth of remote working
and service delivery, which has boosted data requirements by both residential and business
customers. This resulted in a 33% increase in residential internet demand (Financial Times,
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2020) the number of homes in Australia connected to higher speed NBN connections
increasing from 4.9 billion to 5.2 billion since the pandemic started (ACCC, 2020). The
increased demand for retail internet, offering a higher margin, has helped offset major losses
caused by the Bushfires and Covid-19 more generally. Telstra’s revenue for FY2020 was six
per cent, substantially lower than other sectors (Telstra, 2020). The continuation of the work
from home trend, accelerated by COVID-19, will present a significant opportunity for
growth, that can be capitalised on by leveraging record-low interest rates for investment
(Reserve Bank of Australia, 2020).
Technological development and lowering cost of 5G networking has enabled Telstra to
increase retail and commercial offerings and build on its competitive advantage in
engineering and network management. While Telstra’s 5G network is expected to cover 75%
of Australians by mid-2021, Optus and TPG/Vodafone are rapidly accelerating their programs
(Telstra, 2020). In addition, the expansion of 5G reduces Telstra's historic competitive
position in fixed-wire networks. Major technological change represents an inherent threat to
market leaders in such circumstances (Camillus, 2016).
Legal and Environmental concerns include changes in the current regulations which could
impact Telstra’s market position. Foreign governments may create barriers for Telstra to enter
in network business overseas or withdraw from existing joint-ventures ( Hanson et al., 2017).
Telstra’s revenue could be impacted with its carbon emissions target to brand itself within the
league of green organisations. Telstra’s existing portable battery fleet offers an opportunity
for growth, through meeting the temporary power needs of diverse industries (Cartlight J.,
2020). Refer to Appendix 12.1 for full details.
External Turbulence model
Historically Telstra’s faced a relatively inactive environment under the External Turbulence
model. Limited competition and a steady regulatory environment allowed the organisation to
focus internally on cost-minimisation and delay disruptive technological innovation, such as a
fibre optic broadband network (Collier et al., 2018).
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Technological and competitive change has significantly increased the Environmental
Turbulence Telstra is facing. In particular the rapid roll-out of competing 5G networks,
growing international entrants and competitor consolidation (Telstra, 2020). This uncertainty
is off-set somewhat by the industry’s long lead times and cyclical nature for infrastructure
development, which reduces unpredictability. Under the Turbulence model this is consistent
with an environment of high complexity and dynamism, but relatively low unpredictability
(Volberda, 1998).
Figure 1: Telstra position in the specific turbulence model
Porter Five Forces plus Government model
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Figure 2. Adaptation of Porter’s 5 forces + Govt. model in Telstra’s context (Porter, 1979)
Application of Porter five forces Plus Government model on Telstra as documented in
Appendix 12.2 indicates that the bargaining power of buyers is high due to presence of
MVNO’s, competition, e-SIM’s and number portability (ACCC, n.d.). Threat from substitutes
comes in the form of NBN (Australian Infrastructure Audit, 2019, pp.559, pp. 572) and other
optical fibre companies with Wi-Fi technology at the front end. Also, suppliers bargaining
power is relatively high due to their limited numbers in the hi-tech industry (5G) which is
amplified by government regulations like banning of Chinese network vendors (Shu, 2018;
Sbeglia, 2019). Whereas, new entrants face high barrier levels due to the high cost of
resources (spectrum, network devices) and regulators like ACCC preventing the TPG-VHA
merger (Pohl, 2019). All these factors affect the competitiveness intensity and overall
profitability of the industry. Telstra manages these mega forces through key partnerships with
suppliers (Ericsson, n.d.), 5G leadership via aggressive rollout and customer-centric focus
with flexible and economic plans (Telstra, 2020).
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