Case Study: Strategic Challenges and Future of Australia Post

This case study provides a strategic analysis of Australia Post, examining the challenges it faces in a rapidly evolving communication and delivery landscape. It begins with an overview of the company and the mail industry, highlighting the decline in traditional letter volumes and the shift to...Read More

STRATEGIC
MANAGEMENT

1
Executive summary
In the era of technological communication, letters have lost their importance and
hence the industry has also seen a decline in terms of their growth. Most of the companies in
this industry have transformed into the parcel and retail products delivery firms. Australia
post has an experience of working in this industry for over a century. Most of the letters in
this industry is sent for the government purpose. Since there is larger competition in the
market where the demand is less hence it is not attracting new ventures to invest in it. This
has also raised the demand for making effective strategies which helps them in moving
towards the blue ocean strategy rather than being in the red ocean market. It is essential for
the companies to make sure that they have effective plans for their future so as to ensure
higher levels of growth. It can only be possible if there is proper understanding of the
environment that is present around the firm. Companies also need to understand the scope of
the industry in future and build new strategies accordingly.

2
Contents
INTRODUCTION.................................................................................................................................3
Company and Industry.......................................................................................................................3
Macro Analysis..................................................................................................................................4
Industry Analysis...............................................................................................................................4
Competitors analysis..........................................................................................................................6
Strategy analysis................................................................................................................................6
Conclusion.............................................................................................................................................7
Recommendation...............................................................................................................................8
REFERENCES......................................................................................................................................9
INTRODUCTION
In modern day business, companies all around the world are facing several kinds of
challenges (David, 2011). These challenges are posing threat to the growth of the company
irrespective of the industry they belong to. It is essential for the firm to take care of the
strategies they are making for their business. It is also due to the fact that there had been a lot
of change in the ways of doing business (Kovarik, 2015). The mediums of communication
have changed over the years where electronic forms of communication have superseded the

3
traditional letter and mails. Australian post which was once one of the biggest in the industry
has seen a downfall. This report highlights the environment that is present around the
company as well as the condition of the industry. It also provides the analysis on the
completion that it is facing in the market due to alternative sources of communication.
Company and Industry
Mail and post Industry have many years of history as in the olden times it was the only way
of making the communication. Before the commencement of Digital era of communication it
was considered to be as the best mediums of transferring messages from one place to another.
This industry has seen a gradual decline in terms of becoming a way for doing the
communication (Hitt, Ireland and Hoskisson, 2012). These days In Australia, 97 % of the
post are send only for government works and only 1% is sent for having private
communication. This has created a whole lot of challenges for the companies like Australia
Post. This company has faced a huge loss to its financial resources due to the declining of the
mail business. It is due to the reason that cheaper and faster mediums of communication have
emerged (Milne, 2012). Another major challenge that Australia Post is facing is that the
delivery of post have become expensive and they cannot charge high from the clients.
Australia post was established in the year 1809 and in only a decade it was capable of
delivering mails in almost every part of the Australia (Australian Postal Corporation, 2016).
They have played a greater role in the Industrial revolution of Australia. This company was
known for doing innovations in speeding and sorting of the mails and its delivery practices.
At present this company is delivering around 60 million items per week. It is employing
around 36000 employees in 3832 communities and having around 10000 delivery contractors
(Australia Post, 2016). It has seen a steady growth in its revenue but has seen the drop in the
letter volume. It is operating with 4406 post.
Core competencies
 It is also having large consumer base that highly trusts them in terms of their services.
 This company has an experience of working in the Australian market for over two
centuries.
 Higher cash deposits from the previous operations will help them in their plan of
transforming their business.
 Large number of offices and a very skilled workforce.
 Lesser number of strategic failures in its record books.
 A good leadership at the top helps the firm in making quick decisions as per the
requirement.

4
Resources and capabilities
 This company is having one of the largest chains of networks approx. 4,379 post that
help them in delivering services on time.
 Its financial performance is very good with a profit after tax is around $95.4 million.
 Their post registration is up by 146% in 2016/17 and greater choice and flexibility is
provided to consumers.
 It is operating in rural and remote areas as well.
 It is operational in more than 190 countries all across the globe and they are capable
of expanding their business in other parts of the globe as well.
Macro Analysis
It is essential for every organisation to understand its external environment (Wheelen
and Hunger, 2011). This helps in understanding the factors that are influencing the business
of the company. Factors that are making external environment of the company are as follows:
 Political: Government of Australia is planning to move towards e-governance. This is
matter of concern for the company as 97% of the letter that cited company delivers is
related with the government works. The government policies favouring electronic
mediums of communication have also reduced the business of Australia Post.
 Economic: There is downfall in the economic stability of nations all around the world
(Barney and Hesterly, 2015). This has forced people to choose those mediums of
communication that are cheaper. Generation of higher margins of profits is a difficult
task for the company.
 Social: Society has changed and so is its communication needs (Coffield, 2013).
People now days are demanding for the communication mediums that is faster and
cheaper. Electronic mediums have increased the ways in which people can express
themselves and since post provides just a written form of communication and hence
they have lost their position in the market.
 Technology: With the introduction of telephonic mediums of communication, post
has lost their value in the market. People are using advance mediums of
communication for transferring personal information (Keupp, Palmié and Gassmann,
2012.). With further advancement in internet facilities that too at cheaper rates has
almost wiped out the conventional letters through companies like Australia Post.
 Environmental: Since the concerns related to the environment is increasing and hence
communication has taken internet mediums. Mails and letters were using papers and
hence use of such mediums of communication was discouraged.

5
Industry Analysis
It is also essential that company understands its position in the industry. Australia post also
has to understand the position of the industry. Cited company also needs to understand the
demands of the market and the condition of industry in the changing global market. It helps
to make the strategies for the future business as well as it helps in making plans for their
operations (Sebastian, 2012).
From the age of Industrialisation mails become not only the part of personal communication
but it also became the way for communicating with each other in the business. In the
beginning, Horses were used for transferring mails from one place to another. In the 20th
century they started the business of delivering goods also. But with the introduction of
modern mediums of communication like the telephones this industry has seen a gradual
decline (Beko and Jagric, 2011). It is due to the fact that method of delivering the message
was too much expensive and it took a lot of time to deliver even a single page of message.
Electronic mediums were capable of transferring messages overseas instantly. Mails provided
complexity as the amount of message that can be delivered at one time was very less. With
the further advancement in technology and introduction of Internet mediums like the e-mails,
voice and video calls has affected the industry in a larger manner as it enabled people to
communicate with each other in various forms.
Porters five forces analysis can be extremely helpful for understanding the condition of
Australian Post.
 Threat of New entrants: Since the number of users that is using letters as a medium of
communication are decreasing day by day and hence it is not attracting new firms to
come into the business. But the major challenge is produced by the companies that are
dealing in the business of goods delivery for example Fed EX. This somehow makes
the chances of new firms to coming into this business otherwise this threat is on the
lower side.
 Bargaining power of suppliers: Number of Suppliers in Australia has increased and
hence bargaining power of theirs is on the lower side. Paper suppliers as well as the
transportation suppliers are also present in high numbers and hence supplying
required products at lower cost (Van der Linden, 2015). Australian post has stronger
bonds with their suppliers.

6
 Bargaining power of consumers: People are adopting modern mediums of
communication for transferring the message and hence the bargaining power of the
consumers has increased. Day by day the speed of transferring the data is increasing
and hence consumers prefer it over the traditional post office mails.
 Threat of substitutes: This threat is very high it is due to the fact that other mediums
of transferring message have become easier, cheaper, real time and faster. This
provided consumers with variable options to communicate with others. Goods and
parcel delivery companies have taken the business from Australian Post as they are
providing better services to their consumers.
 Threat of competitors: There are many competitors present in the market offering
different forms of communication mediums (Thompson, 2013). Some of the bigger
competitors of the cited company are Fed Ex., Toll Holdings, Japan Post, China Post
and Telstra. These competitors are making it difficult for Australian Post to ensure
higher growth.
On a concluding remark it can be said that there is very less chance for the new
companies to proper in this market if they seek to do business in only letter delivery services.
The attractiveness of the industry for new ventures is on the lower side.
Competitors analysis
There are various competitors present in this industry and have the capability to
influence the market and choice of people (Crowley and Heyer, 2015). Companies like Fed
Ex. have captured the larger part of the Australian market. They have become a brand name
in safely delivering goods on time. People already started to understand Australia post as the
parcel company and hence other private parcel firms are making the difference. Australia post
has its business in many other parts of the world but it is facing stiff competition from the
companies like Japan Post and China post. With the changing global market of parcel and
letter delivery the chances of expanding their business is further narrowing down (Peters,
2012). Company are finding innovative ideas for doing their business.
Strategy analysis
Identification of strategy
Australian post has made many strategies for their future operations. First strategy
that this company has decided is to convert its business into more of digital form. This
strategy is necessary as it will help them in capturing the digital market of logistics and retail.

7
It is the need of modern day business irrespective of the industry. It will not only help
company in transforming their business but also helps company in reducing its cost of
operations. Digital mediums will also help consumers in knowing their delivery status hence
making the whole system more accountable.
Apart from this cited company has decided to adopt strategy related to entering into new
business like the parcel industry or the retail industry of Australia where it can be the partners
of delivery for the other firms. This strategy will help company in ensuring a long term
growth even when the letter delivery services will come into extinction.
Is it working?
On answering to this question it can be analysed that yes it is working since already people
have started to understood it as a parcel delivery company. This image of the company will
help them in entering into the new markets with such kind of service background.
New strategy
The present day strategy of the company is very effective as it will help them in capturing the
larger part of the market. In order to continue with this strategy of becoming a digital
company, they should make their own app that makes booking of the orders easier as well as
facilitates customers in tracking their order status. Apart from this it is also essential for the
company to adopt digital medium for marketing their products since the company has
performed poor in terms of marketing its services.
New strategy that this firm can adopt is to come into business of home delivery of retail
products where it can become the partner of the new ventures that aims to deliver products at
lower cost. Since this company has a long delivery chain which it can effectively utilised for
this purpose. It has deeper understanding of the ways to operate in Australian market that too
in the business of delivery and logistics. All these experience will help in start of new
business.
Conclusion
From the above based report it can concluded that Australian Post was known for its
service in letter delivery industry in all over the world. With the adoption of digital mediums
for communication this mode of message transfers is very rarely used. In the coming years

8
also this is expected to reduce to further lower levels. In order to ensure the long term growth
company needs to come in other businesses also like parcel or logistic delivery. Adoption of
digital mediums can help in this regards. It is essential for the company to understand the
future of the industry as well as the environment in which it is working.
Recommendation
This is an era of digital business and hence company like Australia Post has to think
about taking more of digital means for completing its operations. This will not only help
companies in reducing their cost of operations but will also assist consumers in easily
availing required services. This company must train their employees so that they can easily
work on these digital mediums. It will help in ensuring that there is no loss of jobs while the
company is making business shift.
While predicting the future of this industry it can be said that the amount of letter that is sent
through these companies is going to decrease. Even the government is shifting towards the
electronic governance. This industry is going to somehow merge with the parcel and retail
delivery services and hence companies also have to think about tending towards such
business.

9
REFERENCES
Australia Post, 2016. Australia Post- our past. [Online]. Available at:
http://auspost.com.au/education/ourpost/students/our-post/timeline.html. [Accessed on: 21st
February 2018].
Australian Postal Corporation, 2016. Domestic Letters. [Online]. Available at:
https://auspost.com.au/sending/send-within-australia/compare-letter-services. [Accessed on:
21st February 2018].
Barney, J.B. and Hesterly, W., 2015. Strategic management and competitive advantage
concepts and cases. Pearson.
Beko, J. and Jagric, T., 2011. Demand models for direct mail and periodicals delivery
services: results for a transition economy. Applied Economics. 43(9). pp.1125-1138.
Coffield, K., 2013. Keeping Post Offices Public: Three Case Studies On The Disposal And
Rehabilitation Of Historic Post Offices.
Crowley, D. and Heyer, P., 2015. Communication in history: Technology, culture, society.
Routledge.
David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Keupp, M.M., Palmié, M. and Gassmann, O., 2012. The strategic management of innovation:
A systematic review and paths for future research. International Journal of Management
Reviews. 14(4). pp.367-390.
Kovarik, B., 2015. Revolutions in communication: Media history from Gutenberg to the
digital age. Bloomsbury Publishing USA.
Milne, E., 2012. Letters, postcards, email: Technologies of presence (Vol. 24). Routledge.
Peters, J.D., 2012. Speaking into the Air: A History of the Idea of Communication. University
of chicago Press.

10
Sebastian, H.J., 2012. Optimization approaches in the strategic and tactical planning of
networks for letter, parcel and freight mail. In Modeling for Decision Support in Network-
Based Services (pp. 36-61). Springer, Berlin, Heidelberg.
Thompson, J.B., 2013. Ideology and modern culture: Critical social theory in the era of mass
communication. John Wiley & Sons.
Van der Linden, F.R., 2015. Airlines and Air Mail: The Post Office and the Birth of the
Commercial Aviation Industry. University Press of Kentucky.
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business
policy. Pearson Education India.