MGT302A/BIZ303 Strategic Management: Telstra Case Study Analysis

This case study provides a strategic analysis of Telstra, a major telecommunications company in Australia. It examines the external environment using Porter's Five Forces and PESTLE analysis, highlighting competitive rivalry, supplier and customer power, threats of substitutes and new entrants, and the impact of economic and political factors. The internal analysis focuses on Telstra's value chain, core competencies, and recent restructuring initiatives, including job cuts and the creation of Telstra InfraCo. The report discusses Telstra's competitive advantages, strategic goals, and initiatives for cost leadership, differentiation, and sustainability. It concludes with recommendations for improving internal management practices, customer satisfaction, and overall organizational growth. Desklib offers a wealth of similar case studies and academic resources for students.

Running head: STRATEGIC MANAGEMENT
Strategic management
Name if the student
Name of the university
Author note

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Executive summary:
In this study, it has been identified that in the competitive business industry, strategic
management is very important. The company named Telstra has been highlighted in this
study, which is a popular telecommunication organization. In order to deal with the
increasing rate of customer demand and competition, the company has adopted various
strategy regarding the `development of modern technology and involving a large number of
customers in the organization within 2022. It has also decided to bring the changes in the
organizational structure and development of performance management practices. From the
analysis of external and internal environment, it has been identified that political and
economic situation in Australia is playing an important role in developing the business. On
the other hand, from the strategic analysis, it has been identified that the organization has
taken various initiatives for improving the organizational culture and rate of profitability. At
the end of the study, it has mentioned the importance of the business strategies by
highlighting both the positive and negative sides.

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Table of contents
Introduction....................................................................................................................3
External.......................................................................................................................3
Internal........................................................................................................................5
Analysis of competitive advantage.................................................................................5
Discuss competitive rivalry........................................................................................5
Strategy formulation and choice.....................................................................................6
Vision..........................................................................................................................6
Goals...........................................................................................................................6
Initiatives....................................................................................................................7
Recommendations and conclusions................................................................................8
Reference and bibliography..........................................................................................10

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Introduction
The term strategic management describes the implementation and formulation of the
important initiatives and goals adopted by the company (Hill, Jones & Schilling, 2014). In the
current business scenario, the importance of strategic management is increasing as it helps to
deal with both the internal and external situation of the company. In this study, the company
named Telstra has been highlighted. It is one of the largest telecommunication service
providing company in Australia. In the current business situation, the changes in customer
preferences and increasing eternal changes, the importance of strategic initiatives have
become necessary. In this study, both the external and internal environment of the company
named Telstra have been highlighted. By discussing the competitive advantages of the
company, the study has mentioned the goals and initiatives taken by the organization.
Evaluating the organisation’s environment
External
In order to analyse the external environment, the porters five forces have been highlighted
below
Situation Analysis
Competitive
rivalry
Vodafone, Virgin Mobile and Optus are the three biggest rival of
Telstra as these organizations have already expanded the business in
the global telecom industry (McDougal, 2017).
Bargaining power
of the supplier
In the current Australian market, increasing customer demand and
changing preferences, have brought the challenge for the company
named Telstra. The network and electronic components are being
collected through the third party (Telstra.com.au, 2018). In the
competitive business industry, bargaining power of the suppliers is

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moderate.
Bargaining power
of the customers
With the increasing number of competitors, the availability of the
suppliers is also high. Therefore, the bargaining power of the
customers is high.
The threat from
substitute
products
It has been identified thatthe telecommunication products such as
video and audio products are available in the market on the other hand,
with the increasing number of competitors, the availability of the
substitute services such as data plan, recharge offer and internet speed
are higher in the market. As an example, Vodafone provides 100GB in
$80, which is quite amazing (Vodafone.com.au, 2018). Therefore the
threat from substitute products is high.
A threat from
new entrants
In the current scenario, with the increasing economic growth, different
business organizations have got the chance to develop their business.
New telecom organizations have started developing. However,
comparing with the position of Telstra, this can be said that the threats
from new entrants is low.
From the PESTLE analysis, the important elements such as Economic and Political factors
analysis in the organization name have been discussed below.
Economic factors:
The rate of inflation, interest, savings, economic cycle and the foreign exchange rate of the
company is being influenced depending on the economic situation of the country. If the
Australian business industry is being analysed, it will be identified that in the year 2016, the
annual growth rate of the company was 2.8% (Telstra.com.au, 2017). In the year 2017, the
income growth was 4.3% (Telstra.com.au, 2017). Therefore, it can be said that the increasing

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economic status of the country is beneficial for the company. The government intervention
and open market are the important influential factors in the telecommunication industry. In
the case of the Australian business market, the labour cost is not much. On the other hand, it
has been identified that the employment rate in this county is 5.5%, which is quite good
(Tradingeconomics.com, 2018). Therefore, this can be said that the economic factors are in
favourable condition for the company. Due to the impact of low wages, the company is being
able to appoint large numbers of employees with the minimum wages, which can influence
its rate of profitability. Inflation is being considered as the important influential factor for
every organization. It can be said that due to low inflation cost, the risk for falling in deflation
can increase, which will derive the economic condition in weaker situation.
Political factors:
Political factors play the significant role in the case of dealing with the business issues.
Australia is being considered as one of the important peaceful nations in the world.
Therefore, this can be said that the political stability in the country influences the
development of business organization named Telstra. Internal business regulations, legal
framework and the business initiatives are required in the case dealing with the political
situation. Taxation rates and incentive structure of the country influence the organizational
growth. After analysing the situation, it has been identified that trade and tariffs regulations in
this country are in a favourable condition for the company. Although, Telstra has faced
various favourable situations for the stable political situation in Australia, but the biggest
threat of the company is NBN co limited. Due to the increasing cost and unfair policies NBN,
the customer service is getting hampered.

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Internal
It has been identified that the value chain analysis is being considered as the important part in
business analysis as it helps to define the core competencies of the organization. Through the
value chain analysis, the business chain as well as the competitive advantages of the company
is being analysed. The creating and delivering process of the products and services are being
analysed through the primary activity. In this process, the manufacturing unit, raw materials
and other components are being involved. On the other hand, in the case of support activities,
the production unit, marketing unit and management units of the company are being
involved. From the internal analysis of the company, it can be said that efficient employees,
effective infrastructure and technological support have made the organization strong. In this
study it has been identified that Telstra wants to split the infrastructure for taking the
preparation to deal with the potential demerger. The company announced to cut near about
8000 jobs for introducing the major restructure. With the changing infrastructure it wants to
come with the named Telstra InfraCo (Theguardian.com, 2018). It is true that this change will
affect near about thousand employees, however, developing the nations’ leading
telecommunication organization such bold steps are required.
Analysis of competitive advantage
Discuss competitive rivalry
In this study, it has been identified that the company named Telstra has developed its
business in the market with efficiency. However, due to the availability of financial
resources, the increasing number of competitors have created challenges for the company. In
order to deal with increasing competitions the company has developed the effective business
strategy. It has focused on simplifying its products and developing the digital experiences of
the customers. It has also decided to introduce effective cost reduction programs, so that the
rate of profitability can be increased. In the current telecommunication business industry,

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Vodafone, Virgin Mobile and Optus are creating threats for the company. In the year 2017,
the business revenue of Vodafone was 59.13 million EUR (Vodafone.com. au, 2018). The
business revenue of Virgin mobile in the same year was near about 225.86 million. The
business revenue of Optus was 563.64 million (Optus.com.au, 2018). Another way, if the
business revenue of the company named Telstra is being analysed, it will be identified that in
the same year the business revenue of the company was 28200 million. Therefore, this can be
said that among the competitors the company is leading the telecommunication industry in
Australia. However, it is facing tough competitions from the Company named Vodafone. It
has been identified that in the year 2018, the market share of Vodafone is 14.4%, where
Telstra increased its share 39.5% and Optus 24.2%. From the collected information it can be
said that with the increasing market share Telstra has become one of the renowned
telecommunication service providing organization.
Strategy formulation and choice
Vision
If the vision of the company is being analysed, it will be identified that the company
named Telstra wants to develop the effective technology for improving the connectivity with
the customers. Therefore, this can be said that the aim of the company is to provide the
effective customer service (Telstra.com.au, 2017).
Goals
 To achieve top position in the world telecommunication industry by developing the
unique technology for satisfying customer needs (Telstra.com.au. 2017).
 To embed environmental and social reflections into the business practices for
increasing the value of the stakeholders as well as the company
 To provide the solution to the suppliers in order to deal with environmental challenges

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 To establish the strong image in the global industry for influencing the rate of
employment
Initiatives
Cost leadership and differentiation both strategies were introduced by Porter. Cost
leadership strategy is being considered one of the important strategy for developing
competitive advantages in the market (D. Banker, Mashruwala & Tripathy, 2014). By
adopting this cost leadership strategy, the company can be able to introduce a smooth cost
reduction process. On the other hand, the differentiation strategy is being introduced for
distinguishing the business organization from the competitive market (Cascetta & Coppola,
2014). In this situation, when the company named Telstra is dealing with excessive
competition and increasing customers’ demands in the market, here both the strategies are
required to get adopted. Materials have become one of the major risks for the company. From
the external market analysis, it has been analysed that due to changing demands of the
customers and availability of political support, many organizations have entered the
telecommunication industry. Due to this reason, the business organizations are dealing with
the identity regarding issues. Increasing expenses have also become the concern for Telstra.
For dealing with the supply process related challenges, the company has decided to reduce
the rate of energy consumption through the effective operations and develop the appropriate
monitoring, planning and management practices by investing in the reviewable energy.
Through this processing the profitability rate can be increased. For avoiding the Tax related
issues, conservative tax profile is being maintained by the company. Customer satisfaction is
the major concern of every company, therefore customer data is needed to be maintained with
privacy (Eid, 2015). These processes indirectly help organization in increasing its
profitability rate.

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On the other hand as the study has already mentioned that the company has decided to
develop effective internal management practices so that the rate of employment can be
influenced, therefore, Telstra has taken the initiatives for developing the health, safety and
wellbeing. In order to engage a large number of employees in the organizational activities the
company has tried to maintain the cultural initiatives. It has also decided to introduce
effective leadership practices as it will help to reduce the inequality and all kind of
discrimination in the organization. By providing the environmental solution, the company
will be able to maintain the sustainable situation that will influence its growth (Tukker &
Tischner, 2017). These strategies cannot influence the cost reduction process, but it can be
beneficial for influencing the others operations in the organization. Hence, this can be said
that both the cost leadership and differentiation strategies are required for managing the
current situation of the company.
Recommendations and conclusions
The company named Telstra has decided to change the product offering way and
make it simpler for reducing the customer pain and increasing digital experience. I strongly
believe, this strategy can be beneficial for the company because by simplifying its approaches
the company will be able to get conned with the customers directly. This will be easier for
understanding the needs and demands of the customers. Another strategy taken by the
organization is related to the organizational structure. The company has decided to introduce
the standalone business infrastructure for improving its business performance (Berkhout,
2012). I believe, through this initiative the company will be able to grab the attention of a
large number of customers in the case of dealing with the business issues. The third strategy,
which has been taken by the organization in the making the process of approaching more
gentle, I have analysed, through this process, the company will be able to satisfy the needs of
the customers. The fourth strategy is being considered as one of the important business

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strategies as it helps to deal with the issue regarding excessive cost. I believe, by adopting
this cost-effective strategy the organizational expenses can be reduced. On the other hand, I
also believe, by adopting this strategy, the business organization will be able to increase its
rate of profitability. As per my knowledge, I can say that by adopting these strategies, the
company will also be able to develop effective leadership strategies in the organization.
Through this process the engagement of employees can be increased.
However, I have supported all the above strategies, but it cannot be denied that in the current
business scenario, the changing needs and demands of the customers cannot be predicted by
anyone. Due to the rapid changes in organizational culture and market needs it cannot be said
that the strategies which have been taken by the organization can be beneficial for it in 2022
as the business market is unpredictable.

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Reference and bibliography
Barney, J.B., (2017). Resources, capabilities, core competencies, invisible assets, and
knowledge assets: Label proliferation and theory development in the field of strategic
management. The SMS Blackwell handbook of organizational capabilities, pp.422-
426.
Cascetta, E., & Coppola, P. (2014). Competition on fast track: an analysis of the first
competitive market for HSR services. Procedia-Social and Behavioral Sciences, 111,
176-185.
D. Banker, R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to
more sustainable financial performance than a cost leadership strategy?. Management
Decision, 52(5), 872-896.
Eid, R. (2015). Integrating Muslim customer perceived value, satisfaction, loyalty and
retention in the tourism industry: An empirical study. International Journal of Tourism
Research, 17(3), 249-260.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
https://tradingeconomics.com/australia/employment-rate)
https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/Annual-Report-
2017.PDF)
Kurt, A., & Zehir, C. (2016). The relationship between cost leadership strategy, total quality
management applications and financial
McDougal, M. (2017). Insights from the company monitor: Telstra. Equity, 31(11), 15.