Business Environment Report: Telstra Macro Analysis (BIZ202)

This report provides a comprehensive analysis of the macro-environment of Telstra, an Australian telecom company. It utilizes the PESTEL framework to examine the political, economic, social, technological, legal, and environmental factors influencing Telstra's operations and strategic decision-making. The report highlights the impact of factors such as political stability, economic growth, technological advancements, and legal regulations on Telstra's market share, profitability, and overall business performance. Recommendations are provided to address potential risks and capitalize on opportunities, including expanding into politically stable markets, adapting to technological changes, and adhering to legal and environmental standards. The report also considers the influence of factors like inflation, unemployment, and international trade policies, concluding that a proactive approach to environmental scanning is essential for Telstra's continued success.

Running Head: MANAGEMENT 0
BUSINESS ENVIRONMENT

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Table of Contents
Introduction................................................................................................................................2
Macro-Environment Analysis and Recommendations...............................................................2
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
This report outlines part B of the business environment report outlining significant
macro environmental factors influencing the business decision making process in relation
with appropriate frameworks and tools to the uncertainties and challenges faced by the
Telstra. Like stated in the context, businesses in contemporary marketplace cannot afford to
ignore external factors in which they function and they must keep an eye on macro-
environmental aspects which influence them directly or indirectly. With identifications of
these factors, recommendations measures are also being suggested in relation to the concern
risks with comprehensive assessment to counter them.
The organisation that is selected in Part A is Telstra, an Australia founded telecom
firm having its operations in more than 20 countries. The biggest competitors of the company
are Vodafone and Optus, however, since 2010, Telstra has consistently attained the largest
market share considering mobile phone service providers (statista.com, 2019). The specific
environment is caused by external factors of uncertainty and unpredictable.
Macro-Environment Analysis and Recommendations
The macro-environment of Telstra involves those key factors, which have greater
influence over a company product or services and they are not fully in control of management
and executives of the company. To best analyse these factors, PESTEL framework can be
used to identity their impact on change in performance of the business, growth, profitability,
market share and policies -

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 Political Factors – Greater political stability in the business environment of a
company offers a stable and friendly business environment with anticipated market
growth trends. As Telstra have its presence at international stage, it increases its
business sensitivity to changes in the political environment of different countries. In
context with Australia, the political factors of Telstra can be associated to pushing of
regulatory reforms by the telecom authority like they favour of National Broadband
Network leading the company to positively sell its copper and HFC networks for $11
billion (Bingemman, 2015) and therefore, increase entry barriers in the Australian
telecom markets. Furthermore, there is a higher political stability in Australian as the
country have a cordial international diplomatic connections with most of the nations
around the world and hence, this presents many business opportunities to the
company. It is recommended to Telstra to expand its operations into emerging and
more political stable countries such as India as it will benefit the company to achieve
economy of scale in a longer term.
 Economic Factors – It is necessary for Telstra to understand economic factors such
as foreign exchange/interest rate, labour market situations, saving rates of different
countries in which they are operating. An inclusive understanding of the economic
environment can help Telstra to strengthen its position as per the various variables in
the environment. Considering telecom growth in Australian, Subdued GDP as of
deteriorating commodity prices can have a noteworthy influence and as per the
projections in 2017, it is anticipated that there will be a potential decline of the main
EconomicPolitical
Social Technological
LegalEnvironmental

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exports of Australian products due to demand by Chinese with further goes down of
prices together with decline of coal and iron ore (republicofmining.com, 2018). From
long term perspectives, it is not well for the telecommunication growth and Australian
economy. It is timely for Telstra to pause briefly and reflect, not just on the economic
value that is being created, however, also on the fundamental drivers of that value.
 Social and Cultural Factors – Telstra organisation culture derives strong influence
form society and cultural norms and understanding the demographic trends, however,
there are certain factors which needs to be identified as it can lead to unwanted
change in the business procedures of the firm. According to Meyers & Van Woerkom
(2014), the social aspects are the direct reflection of the society in which an
organisation operates and comprises of various aspects like attitude, belief and values.
Telstra requires to appreciate consumer lifestyle holistically so as to make the venture
prosperous. It is important for the company to offer key importance to class
distribution like they would unable to offer the premium product to the public if the
major population belongs to a lower class and hence, it is required to them to adopt
niche-marketing approach. Majority of population in Australia are having long
families maintaining regular communication with the people through help of
telecommunications as they are much busy in their routine life and not have sufficient
times to meet their belongings, which is also one of the reason for the growth and
success of the company.
 Technological Factors – The technological diffusion around the world and rapid
advancement in technology increased the significant of understanding technological
aspects to each and every industry during the process of strategic management
(Audretsch, Lehmann & Wright, 2014). It offers Telstra an opportunity to provide
innovative products to the society while improving service offerings and consumer
experience. 2019 was the year of 5G and Telstra was found to be working on 4
technology projects – creating new IoT experiences, AI and machine learning, cyber
security and 5G development (Cardy, 2019). It will help Telstra to compete with its
major rivals i.e. Optus and Vodafone with attaining of greater market share in the
Australian telecom industry. It is also recommended to Telstra to start serving new
market segment through leasing of telecom network and infrastructure and mainly in
the developing country. Ultimately, it fulfils the needs and preferences of customers
to a great extent while retaining the current and possible new customers.

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 Legal and Taxation – No company can enter into a new market without examine the
detail of legal environment and regulatory structure in relation with new customer
marketplace. A clear assessment of legal factors is needed so as to avoid getting into
serious trouble, however, one major incident already happened with Telstra in 2018
where the Federal court asked Telstra to pay $10 million as a penalty for ambiguous
depiction to consumers in relation with “Premium Direct Billing” (Pearce, 2018).
Hence, in Australia or any other nation where Telstra seeks to incorporate its network,
the management requires to consider various laws associated to state or particular
market so as to keep organisation, personnel and consumers at safe position. Some of
the other factors that Telstra Corporation Ltd can consider includes discrimination
law, patents and copyright, employment law, data protection regulations and health
and safety law to maintain positive workplace culture.
 Environmental Factors – The increasing environmental concern in the government
and society forced business organisations to adopt innovative recycling and waste
management practices and various countries have placed strict norms to safeguard
their areas via effective policies and approaches. In association to sustainable
environment, there are different standards in various industries and it is required for
Telstra to approach it in an effective way. For example, Telstra can foray into
environment friendly battery storage part and it is also recommended to the company
to use products and energy that are renewably sound. From long term perspectives, it
will offer the company a positive brand image together with government support.
When Telstra abides necessary environmental regulations progressively, it will have a
positive impact on the buying decision of the consumers and therefore, increase
customer loyalty towards the brand.
Apart from this management framework, there are several other macro environmental
factors directly or in-directly influence the company strategies and decision making process
and impact on business performance, structure, growth and market share. These includes
inflation level, unemployment, international trade policies and foreign investment
restrictions. For example, thousands of people across Australia continue to be thrown into
unemployment with little prospect of discovering work and most of them are also being
forced to go for part time as well as low paid casual jobs. Telstra also continue to cut
positions as part of its plan last year while eliminating 10,000 jobs over the next two years
(Cook, 2019).

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Conclusion
Ultimately, the macro environment of Telstra comprises of great opportunities and
threats that cannot be controlled by the firm directly and it requires a firm to undertake
holistic approach to predict future impact of these business environment factors. The most
negative influence on Telstra can be brought by political and legal factors as well as change
in societal trends and preferences. Telstra has attained a greater position in the Australia
telecom market and strives to maintain its competitive side in the market via building
effective measures to raise their social, financial and environmental responsibilities. Investors
and shareholders should rest assured if the management at Telstra proactively scans their
business environment.

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References
Audretsch, D. B., Lehmann, E. E., & Wright, M. (2014). Technology transfer in a global
economy. The Journal of Technology Transfer, 39(3), 301-312.
Bingemman, M. (2015). NBN network deal with Telstra sealed. Retrieved from
https://www.theaustralian.com.au/business/business-spectator/news-story/nbn-
network-deal-with-telstra-sealed/1af2c2f9d3aaebcc7990a53127b04e9f
Cardy, J. (2019). 4 technology projects our teams are working on this year. Retrieved from
https://exchange.telstra.com.au/4-technology-projects-teams-working-year/
Cook, T. (2019). Australia: Official unemployment figures downplay growing jobs crisis.
Retrieved from https://www.wsws.org/en/articles/2019/11/02/jobs-n02.html
Meyers, M. C., & Van Woerkom, M. (2014). The influence of underlying philosophies on
talent management: Theory, implications for practice, and research agenda. Journal
of World Business, 49(2), 192-203.
Pearce, R. (2018). Telstra to cop $10m fine over third-party billing service. Retrieved from
https://www.computerworld.com/article/3457340/telstra-to-cop-10m-fine-over-third-
party-billing-service.html
republicofmining.com. (2018). Top Iron Ore Shipper Warns China Is at ‘Peak Steel’ – by
Krystal Chia (Bloomberg News – October 2, 2018). Retrieved from
https://republicofmining.com/2018/10/02/top-iron-ore-shipper-warns-china-is-at-
peak-steel-by-krystal-chia-bloomberg-news-october-2-2018/
statista.com. (2019). Market share of major carriers' mobile services Australia FY 2010- FY
2018. Retrieved from https://www.statista.com/statistics/488511/australia-mobile-
handset-services-market-share/