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Value Chain Engineering System- Telstra

   

Added on  2020-03-16

16 Pages4883 Words396 Views
Value Chain Engineering System 1VALUE CHAIN ENGINEERING SYSTEM Student nameProfessor’s nameUniversity nameStateDate

Value Chain Engineering System 2Value Chain Engineering SystemExecutive SummaryTelstra is one of the leaders in telecommunication and technology industry in Australia.The company is known for its wide range of services that it offers such as communicationservices. Telstra Corporation Limited provides mobile services to more than 17 millionsubscribers in Australia. Among these services, it gives six million services in fixed voice andover three million in broadband services. The company’s mission aims at ensuring that manypeople are connected and as a result, they create more opportunities. The company is said todevelop technology and solutions that are not only easy but also simple to use. Telstra Limited isranked as Australia’s fastest and most extensive mobile network company. The company has positioned itself in the market by trying to understand the needs andpreference of their customers to offer the best services related to digital content and connection.The company not only serves citizens of Australia but has branches in more than 20 countriesacross the globe. The company believes that opportunities arise to those businesses that areconnected including individuals, communities and governments. To analyze the value chain forTelstra Corporation Limited, Porter’s value chain analysis description of the company will beinvestigated. Porter’s five forces model for analyzing value chain was developed and named afterMichael Porter. The model works through recognizing and examining five competitive forces thatdetermine the strategies that companies use in particular industries. These five forces play asignificant role in determining Telstra strengths and weakness as well as providing an avenue tomitigate the weaknesses and improve on the strength for purposes of growing the business (Wu2011). The Porter's five forces include competition in the industry, new entrants to the industry,power of suppliers, the power of customers and threats to substitute products. These aspects offive Porter’s model can be applied in many segments and are commonly used to identify thestructure of a particular industry for purposes of developing a corporate strategy. The primary objective of this model is to look for areas that are attractive and profitable.The competition aspect of the model focuses on determining the number of competitors and howwell they are positioned in the market to threaten an existing company such as Telstra. The

Value Chain Engineering System 3significance of a firm is defined by a larger number of competitors that offer similar products andservices. Suppliers in a particular industry often inquire about the competition of the company insituations where it is challenging to obtain a preferable deal (Aguirre-Milling & Parhizgar 2014).The potential of new entrants can weaken an existing company if it takes less money and timefor a competition to set up and gain a market share in a particular industry. The power of supplieris a crucial element in Porter's five forces where the fewer the suppliers and more a company isdependent on them, the more the power of supplier holds.This power is determined by other factors such as the price of goods and service,distinction of the services and products and the ability to switch from one supplier to another.The power of customers holds in a situation where there is a smaller and robust customer base.This power is motivated by the ability of the client to influence prices (Brunsman, DeVore &Houston 2011). The threat of substitute implies that if there are more company’s similarproducts or services in the industry, then it threatens the sustainability of an existingorganization. Porter’s five force model focuses on how Telstra Corporation Limited can be ableto develop a sustainable business strategy that can give them a competitive advantage in thetelecommunication industry both in Australia and internationally.Threats to new entrantsNew companies in the telecommunication industry threaten Telstra Corporation Limitedas a result of innovation and better strategies that put Telstra under pressure. The change andnew approach of operation by new entrants can be determined by reducing prices, costs andoffering a better value proposition to existing clients. For Telstra to be able to maintain thecompetitive advantage, it should mitigate such challenges through developing countermeasuresaimed at safeguarding their interests. However, there are strategies that Telstra can implement totackle the threats of new entrants. Among these approaches include innovation of new productsand services which will increase customer loyalty as well as attract new clientele (Lambert2015). Telstra should also build an economy of scale to lower its cost of operation and maximizereturns. Besides, Telstra should focus on building capacity by setting funds aside for facilitatingresearch and development.Bargaining power of suppliers

Value Chain Engineering System 4Majority of players in the telecommunication industry acquire their raw material from awide range of available suppliers. These suppliers have the power to decrease Telstra profitmargin. The suppliers can negotiate and guarantee higher prices among companies in thetelecommunication industry such as Telstra Corporation (Spiler, Kvrgic & Vujadin, 2016). Thispower of suppliers is a threat to the sustainability of a Telstra since it reduces the profit margin ofthe corporation.Bargaining power of buyersConsumers in most industries are often driven by the urge to satisfy their needs.Consequently, buyers will demand the minimum price for the same products and services. Thiswill put pressure on Telstra Corporation to reduce its rates which will affect their profit margin.This implies that the higher the bargaining power of buyers the higher they are likely to receivediscounts among other offers (Young, Tsai, Wang, Liu & Ahlstrom 2014).Threats to substitute goods and servicesThe risk of substitute products and services is often high especially when the valueproposition is uniquely different from similar products and services offered in the market. TelstraCorporation is bound to suffer from substitute services if it fails to innovate products that areneeded in the market and its main competition does. Telstra can overcome this threat bybecoming service oriented and understanding the needs of its customers (Xie, Li & Xie 2014).Rivalry among the existing playersTelstra Corporation conducts its business in a very competitive industry where the intenserivalry is bound to drive the prices of their services down which will, in turn, reduce the overallprofitability margin. If the revenue for the company is reduced drastically, the Corporation islikely to close some of its businesses to increase profit margin. However, the company can builda sustainable differentiation marketing strategy as well as capacity to have a competitiveadvantage (Vrontis, Thrassou, Chebbi & Yahiaoui 2012). Besides, the company can collaboratewith its competitors to increase market share. Telstra management should carefully considerPorter’s five forces and modify every aspect that threatens the existence of their business forsustainability and profitability of the company.

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