Analysis of Telstra's Competitive Strategy in Telecommunications

This report provides a comprehensive analysis of Telstra Corporation Limited's competitive strategy within the Australian telecommunications market. It begins with an introduction to the importance of strategic planning for organizational success, followed by an overview of Telstra, its services, and its core strategic pillars, which include simplifying services, developing a standalone infrastructure unit, simplifying operations, and portfolio management. The report then evaluates Telstra's competitive strategy, examining its retail and wholesale sectors, staff vision, and investment in research and development. The analysis employs Porter's Five Forces model to assess the industry's competitive landscape, including the threat of new entrants, bargaining power of suppliers and buyers, the threat of substitute products, and competitive rivalry. Additionally, the report utilizes the VRIO framework to evaluate Telstra's resources, including brand awareness, marketing expertise, recording project execution, and pricing strategies. The conclusion summarizes the findings and emphasizes the importance of strategic evaluation for achieving organizational objectives. The report highlights Telstra's efforts to enhance customer experience and maintain a strong market position in a competitive environment. This document is a past paper contributed by a student to be published on Desklib.

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Marketing
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4/1/2019

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Contents
Introduction......................................................................................................................................2
Overview..........................................................................................................................................3
Strategy evaluation..........................................................................................................................4
Competitive strategy of Telstra...................................................................................................4
Porters five force model...............................................................................................................4
Resource-based view...................................................................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
An organization needs to have a direction to work along, for which strategy of the company
plays an important role and it acts as successes or failure factor for a company. To achieve the
objective of a firm the strategy must be according to company’s vision mission, and objective. A
strategy is formulating a plan of action for an organization, designed to attain long-term goals of
a company. Strategy formulation of a company requires analyzing the external environment of a
company in which it is conducting business to analyze its market or competitive position and
evaluate the strategy accordingly (Chari & Feng, 2018). The report will include strategic
evaluation while considering two models for industry analysis and analyzing the competitive
position of Telstra Corporation Limited.

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Overview
Telstra Corporation Limited is one of the largest telecommunication companies in Australia
which is responsible for operating and building telecommunication network and markets voice,
pay television, voice, pay television, internet access and some other services and products as well
(telstra, 2019). The company is headquartered in Melbourne serving a whole range of
communication products and services. The company is enabling to lead the market and compete
in the telecommunication market and is willing to enhance the customer experience while
simplifying the services and products, diminishes cost base and simplify the company’s
operations. Company’s strategy is based on the four major pillars for instance
 Radically simplify the services and products offering to the customers and elimination of
pain points for the customers while creating and providing digital experience to the
customers.
 Development of a standalone infrastructure unit of business in order to enhance the
performance and providing the future opportunity
 Structure simplification and simplifying the ways of employees to work in order to
empower the company’s staff and serve the clients well
 Portfolio management and industry-leading reduction of cost (Aksoy, 2018)
Considering the action taken by the company have included delivering market-leading customer
experience, an extension of network and gain 5G leadership ion the market, have achieved
employee engagement through the global high-performance norm. Moreover, the company is
looking forward to a new digital platform. From this it can be said that the company is moving
toward the vision of the company and the action was taken by the company are as per the

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company’s vision and mission. The company believes that the customer experience is a most
relevant factor in the service industry and since the customer can switch to another company
easily, it becomes more important for the company to enhance the service quality and enhance
the experience to sustain in the competitive market (telstra, 2019).
The company major purpose is to develop extraordinary connected future for every individual.
For serving this purpose the value of the business includes five core value like work better
together, show that they care, trusting each other for delivering the purpose, find company’s
courage, and making a complex process simple. Moreover, the company mission also includes
the willingness of an organization to take responsibility for connected future, a phrase “I have no
Choice” will never be considered or determination to never think of this. The desire to learn,
humility and courage for an employee to challenge them in case unable to meet the value is part
of the mission as well (telstra, 2019).
Strategy evaluation
Competitive strategy of Telstra
 Enhanced retail and wholesale sector – Most of the income source for the company is
through the wholesale and retail sector which the company tends to keep in power
position (Andersson, 2016).
 Staff vision – The company has provided a clear vision for the staff and the staff
commitment are the value-added services to be provided to customers at less price.
 Productive corporate construction - The Company has the ability to bring down the cost
of the operation to lowest and increase the stakeholder value (Betton, 2017).

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 Investment in research and development – Company’s research and development team is
responsible for new and innovative in the product development that is responsible for
new profit potential undertaking (Baker & Bowen, 2015).
To evaluate the strategy, the strategic models used would be as follow
Porters five force model
According to this framework, five major forces are responsible for the strategic decision making
of business and analyze the competitive position of the company in the industry. Considering this
framework, five forces in the telecommunication service industry and the effect on these forces
over the Telstra Corporation are

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1. The threat of new entrant
The new entrants in this industry could be a threat to the company but not in a larger
extent. In the industry building trust among the customer are very important and the
investment involved in industry is very huge, which act as entry barriers for the new
company. Although the threat includes the innovation in the services or cost leadership
threat that the new company entering into the market could have brought the products and
services with the latest technology and lower cost and could provide a value proposition
for the clients (Dobbs, 2014).
The company can handle this stress while considering innovation in services and products
to keep the customer, furthermore the company needs to attain the cost leadership that it
can attain through economies of scale and keeping the cost lower (Johnston, 2015)r.
2. Bargaining power of suppliers
The company has an agile supply chain and is procuring raw material from different
suppliers that are a large number of suppliers. For example, in financial year 2017-18, the
company has purchased services and goods from their suppliers for about $13.9, which
were across 45 nations. The raw materials or services for the company to procure include
from cables to buildings, servers to satellite capacity, coffee to stationery, office
equipment to uniforms (telstra, 2019). However, some of the powerful suppliers could be
responsible for a decrease in profit margins for the company that reflects that the threat to
the company regarding this factor is high. The company could reduce the threat of
suppliers by dealing with multiple suppliers, increasing the negotiating power, and
experimenting with different product design and material so that in case of an increase in
the price of one raw material, the company can go for another (Bruns, 2013).

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3. Bargaining power of buyers
In this industry, buyer’s satisfaction is one of the most important factors. The reason
being the competition has been increased and the customers are demanding more from
the companies in this sector. In case they are not receiving the service that they are
expecting from a company, they are switching very fast to another option. Therefore, it
can be said that the bargaining power of the buyers is very high in this industry. The
customers need and expecting more offers and discount for best services received which
Telstra must provide and fulfill the needs of the customers in order to reduce this threat.
Some of the action that the company can take to reduce the threat would be introducing
new products to the market, bring innovation to services and products to retain the
customers, and development of large customer base (Chu & Liu, 2017).
4. The threat of substitute product
Substitute goods are the service or the products that are serving similar needs of the
customer that Telstra is fulfilling are the substitute goods, whose threat is medium in this
industry. The major substitute for Telstra is Google drive and Dropbox, which can be the
company’s substitute considering the hardware storage devices. Since the technology is
enhancing and the digitalization has been taken over the industry (Jaworski, 2018). The
cloud-based storage could take over the hardware storage market, which reflects a threat
to the company. The company can overcome this threat by becoming more service-
oriented than just concerning the product to offer, by understanding the customer needs
and wants and expectations per the environmental and social changes. The company can
increase the switching cost for the customers in order to retain customer to stick to the
products offered by the company (Doole & Lowe, 2008).

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5. Competitive analysis
The competition is very high in the industry that could lead to price cut competition. The
major competitors of Telstra would be Vodafone, Optus, and virgin mobile. Among these
Vodafone is consider to be one of the largest competitors of the company as the company
is serving worldwide and one of the popular telecommunication company around the
globe. The company has been targeting the tier two and urban class segment. Moreover,
Vodafone has positioned its brand as a strong service provider with the best service
quality globally. The strength of the company includes various services provided by the
company like landline services, digital TV services, and mobile telephony. Therefore, it
can be said that the competition is very high in the industry (Ogutu & Mathooko, 2015).
Resource-based view
VRIO framework would be another model for analyzing the strategic analysis of Telstra. VRIO
reflects Value of the resources, Rareness of the resources, Imitation Risk, and Organizational
Competence. The resources of Telstra would be analyzed using this model.
Resources for analyzing these four factors would include:
1. Brand awareness – This is one of the major resources for the company which is a
valuable resource of the organization. This resource would also reflect the rareness factor
as it is one of the leading brands in the industry in Australia. The imitation risk is also
low, as the name of the brand is popular among the customers that are difficult to imitate.
Considering the organizational competence the company has used the brand position in
multiple segments in the industry (Chatzoglou & Chatzoudes, 2018).

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2. Marketing expertise – This resource of the company has value to the firm, the reason
being the company is able to market its product effectively in Australia and the
companies competing consider differentiation as a major aspect in industry. This resource
is not rare as there are many companies adopted various marketing strategy in the
industry. This resource is not considered to be free of imitation risk as the pricing strategy
in this industry are similar to various competitors. This resource has organization
competency as if the firm is leveraging its internal expertise.
3. Recording project execution – This resource is valuable to the firm as well because the
cost overrun is very frequent in this industry reflecting the requirement of this resource to
a greater extent. It is rare considering the Australian telecommunication market and this
resource has not been able to imitate by other competitors, in addition this resource is
responsible for organization competent (Choi & Park, 2016).
4. Pricing strategies – Pricing strategies has definitely a great value to the firm, as this
industry is more of about offering services at the lowest prices. The rareness is not
identified as all the competitors are working over the price penetration strategy and the
imitability is very high. This is successful considering the organizational competency as
Telstra organization has pricing analytical engine which seems to be competent to the
firm (Chu & Liu, 2017).

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Conclusion
From the report, it can be concluded that strategy is the base for the organizational achievement
of the objective and vision. Strategy formulation of a company requires analyzing the external
environment of a company in which it is conducting business to analyze its market or
competitive position and evaluate the strategy accordingly. Telstra Corporation Limited is one of
the largest telecommunication companies in Australia enabling to lead the market and compete
in the telecommunication market and is willing to enhance the customer experience while
simplifying the services and products, diminishes cost base and simplify the company’s
operations.
The competitive strategy of the company includes enhanced retail and wholesale sector, staff
vision, productive corporate construction, and investment in research and development.
Considering porters five-force model, the major threats for the company or the forces identified
to be threats are competitors, bargaining power of buyers and the minimum threats for the
company are due to bargaining power of suppliers, and threat to new entrants. The major
resources found out to analysed through VRIO framework that were most relevant were brand
awareness, marketing expertise, recording project execution, and pricing strategies.

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Bruns, P., 2013. Corporate Entrepreneurship: Innovation and Strategy in large organisations.
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Chu, C.N. & Liu, S., 2017. Hedonic Pricing Method, the Third Law of Demand, and Marketing
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