Strategy Development Tools

This article discusses the importance of strategic tools in formulating plans and achieving objectives in organizations. It explores the application of PESTLE, SWOT, Porter Five Forces, and Ansoff Matrix in the context of Telstra, a leading Australian telecommunication firm.

Running Head: STRATEGY DEVELOPMENT TOOLS 0
COMPETITIVE STRATEGY

STRATEGY DEVELOPMENT TOOLS 1
Table of Contents
Introduction................................................................................................................................2
PESTLE Strategic tool...............................................................................................................2
SWOT Strategic tool..................................................................................................................3
Porter Five Forces strategic tool................................................................................................4
Ansoff Matrix strategic tool.......................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................7

STRATEGY DEVELOPMENT TOOLS 2
Introduction
For the growth of any organisation, management needs to use a set of comprehensive
strategic tools that possess an important element for formulating a plan of actions in order to
achieve strategic objective of the firm (Kuratko and Audretsch, 2009). These strategic tools
also benefit the enterprise to achieve its vision and mission efficiently considering the
dynamic business environment. For better understanding the application of these tools,
Telstra, largest Australian telecommunication firm is selected on which these strategic tools
will be applied so as to gain better insights about practical implications.
PESTLE Strategic tool
This is one of the most significant strategic analysis tools that explore relevant environmental
factors in order to reduce threats. It is also known to be a cost-effective tool that helps the
corporate in deeper understanding of their business influencers’ variables and offers practices
to grab opportunities.
Below, it is an example of this strategic tool on the Telstra organisation -
 Political factors – Pushing of various regulators policies and reforms by the
Australian government.
 Economic factors – Subdued GDP as to fall in prices of product in Australia and Nz
(Hyerczyk, 2019).
 Social factors – Increasing emigrant population that will push telecom service
growth.
 Technological factors – Raising customer service and experience by investing in
digital technology.
 Legal factors – Various reforms and practices by ACCC.
 Environmental factors – Foray into environmentally friendly battery storage
segment.

STRATEGY DEVELOPMENT TOOLS 3
SWOT Strategic tool
The competitive position of an organisation in a specific industry is assessed by this tool that
helps an enterprise in its strategic planning by identifying its strengths, weakness,
opportunities and threats (Helms and Nixon, 2010). By using this tool, an organisation can
explore its various strong potential areas that can be used to attain various opportunities in the
business environment. Considering future perspective, this strategic tool helps the business
firm to formulate proactive plans and policies. Below, the SWOT analysis of Telstra is
elaborated -
Strengths
 The company has friendly relation with various regulatory bodies within the country
(Rahman and Areni, 2014).
 Capitalizing in latest technologies.
 Leader in the telecommunication network having strategic differentiation.
 Telstra dominates the marker in whole of Australia.
Weakness
 In comparison with their competitors, their price is very much high.
 It was reported that they suffer from operational inefficiencies and unsatisfactory
customer services.
Opportunities
 The company can expand into global markets especially Asia Pacific region and
nations like India.
 Diversify service portfolio with varied range of services.
Threats
 In Australia, the mobile market is saturated (Anthony and Keating, 2013).
 Technological advancements.

STRATEGY DEVELOPMENT TOOLS 4
Porter Five Forces strategic tool
This strategic tool is related to the industrial organisation's economies in order to evaluate the
industry competitiveness attractiveness and intensity considering profitability. Michael E.
porter derived this model in 1979 (Wu, Tseng and Chiu, 2012). This strategic tool is used by
various business consultants to evaluate the business strategic position in the industry. In
relation to firms’ profitability, this model helps to develop necessary strategic plans.
 Threats of new entrants – Threat of new entrant in telecommunication industry in
Australia is moderate as new entrants may disrupt the market by lower pricing,
innovative services, and thus delivering necessary value proposition to the consumers.
In current time, Telstra is facing some of these issues relating to introduction of
innovative services or products, inefficient research and development and achieving
economy of scale (Burns, 2019).
 Bargaining power of suppliers – Suppliers maintains a strong position in the
telecommunication market in Australia, which significantly impact profit margins of
Telstra. However, the company is pushing out various strategies by building
efficiency into the supply chain by experimenting with different suppliers as it will
help them to shift to the other suppliers if the other supplier upsurges the price of raw
material.
 Bargaining power of buyers – As Australia telecommunication market is saturated,
the bargaining power of buyers is high. From long term perspective, this will have a
direct impact on market competitiveness. As consumers possess will be having a
higher bargaining power, it will help them to demand more discounts and offers from
the Telstra and this will impact the company sales, operations and production
indirectly. In addition, the company need to bring something new with the help of
innovation so that their customers cannot shift to the other brand.
 Threat of substitute products or services – The industry profit can be impacted if
particular products or services meet customers’ needs in a similar way. For example,
Mega drive and Google drive are considered to be each other substitutes for storage
hardware drives (Greenberg et al, 2008). However, this risk is settled out by Telstra
by being more service oriented and understanding the core needs of their customers
rather than evaluating what they are buying.

STRATEGY DEVELOPMENT TOOLS 5
 Rivalry among the existing competitors – Presence of numbers of competitors in
the industry significantly reduce the firm profitability. In Australia, there is high
competition in the telecommunication market and this induces Telstra to develop
sustainable differentiation in the marketplace and do alliance with the competitors to
increase the size of the market.
Considering all, it will help Telstra to identify necessary opportunity in the market to attain
competitive edge in the industry.
Ansoff Matrix strategic tool
This strategic tool helps the business firm to explore alternative growth strategies by focusing
on organisation existing and potential market or product. Igor Ansoff brings out this concept
including four possible combinations (Jarratt and Stiles, 2010). This matrix can be applied to
Telstra in these ways –
 Market penetration – This approach is related to selling of higher number of
products to the current customers and market. To attain this goal, the company can
take out aggressive promotion technique. Considering customer service strategy,
Telstra underwent several significant shifts with penetration of digital platforms and it
benefits the company while competing with Vodafone and Optus.
 Product development – In this approach, the products are developed for those
customers who are loyal towards the brand. For instance, a new products line may
soon be initiated by Telstra relating to internet of things (IoT) and it will be associated
with the upcoming 5G services that bring a unique experience to both existing and
prospective customers (Eriksson, 2019).
 Market development – In market development strategy, the products are introduced
into a new market with targeting distinct region, division, country or segment.
Considering this strategy, Telstra can increase or expand their business into Asia
Pacific countries such as India and China as it will provide various opportunities to
the company in terms of cheap labour and resources. However, this will require
innovative business model, mergers and joint ventures and resource efficient
manufacturing.

STRATEGY DEVELOPMENT TOOLS 6
 Diversification – It refers to brings out a fresh and unique product to whole new
market. However, this strategy comprises high risks and costs as it may impact on the
firm other product line. Previously since 2013, Telstra was failed to plug earnings
because of unsuccessful investment in various start-ups.
Conclusion
In the limelight of the above discussion, these strategic tools play a vital role in attaining
various organisation objectives and goal. The business environment of today is very dynamic
and competitive and that initiates the needs of these strategic tools for the business firm.
Telstra has successfully dominated the telecommunication market with having huge list of
loyal customers however, there are various threats to the company in the form of competitors,
needs of market innovation, and various other market variables. Considering all these
strategic tools, Telstra can grab various opportunities in the market.

STRATEGY DEVELOPMENT TOOLS 7
References
Anthony, S. and Keating, M.S. (2013) The difficulties of online learning for Indigenous
Australian students living in remote communities–it’s an issue of access. Online Journal of
Distance Learning Administration, 16(2), pp.1-10.
Burns, D. (2019) Tackling today’s technology challenges with innovation [ONLINE]
Available from: https://exchange.telstra.com.au/tackling-todays-technology-challenges-with-
innovation/ [Accessed 24/04/2019].
Eriksson, H. (2019) Launching our global IoT capability with Ericsson [ONLINE] Available
from: https://exchange.telstra.com.au/launching-global-iot-capability-ericsson/ [Accessed
24/04/2019].
Greenberg, A., Hamilton, J., Maltz, D.A. and Patel, P. (2008) The cost of a cloud: research
problems in data center networks. ACM SIGCOMM computer communication review, 39(1),
pp.68-73.
Helms, M.M. and Nixon, J. (2010) Exploring SWOT analysis–where are we now? A review
of academic research from the last decade. Journal of strategy and management, 3(3),
pp.215-251.
Hyerczyk, J. (2019) NZ GDP Grew in Line with Market Expectations but Below RBNZ
Forecast [ONLINE] Available from: https://www.fxempire.com/news/article/nz-gdp-grew-
in-line-with-market-expectations-but-below-rbnz-forecast-563038 [Accessed 24/04/2019].
Jarratt, D. and Stiles, D. (2010) How are methodologies and tools framing managers'
strategizing practice in competitive strategy development?. British Journal of
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Kuratko, D.F. and Audretsch, D.B. (2009) Strategic entrepreneurship: exploring different
perspectives of an emerging concept. Entrepreneurship theory and practice, 33(1), pp.1-17.
Rahman, K. and Areni, C.S. (2014) Marketing strategies for services: is brand architecture a
viable way forward?. Journal of Strategic Marketing, 22(4), pp.328-346.

STRATEGY DEVELOPMENT TOOLS 8
Wu, K.J., Tseng, M.L. and Chiu, A.S. (2012) Using the Analytical Network Process in
Porter's Five Forces Analysis–Case Study in Philippines. Procedia-Social and Behavioral
Sciences, 57(1), pp.1-9.