Strategic Management: Analyzing Telstra Corporation's Business Units

This report provides a comprehensive strategic analysis of Telstra Corporation, a leading telecommunications and information services organization in Australia. It identifies Telstra's various strategic business units and analyzes their relationships within the corporation. The report delves into the sources of Telstra's sustainable competitive advantage, highlighting factors such as brand recognition, service range, infrastructure control, and geographic coverage. It further identifies the corporation's revenue centers and assesses the extent of its diversification, distinguishing between related, related-constrained, and unrelated business units. An external environment analysis is conducted using the PESTEL framework, followed by a SWOT analysis for each business unit. Finally, the report offers recommendations for future strategic mergers, acquisitions, or downsizing initiatives for Telstra, with a conclusion summarizing the key findings and strategic implications. Desklib provides this and many other solved assignments for students.

Strategic Management: Telstra, Australia
1

Table of Contents
Introduction.........................................................................................................................................3
1. Corporation Identification..............................................................................................................4
Identify a corporation with product or service portfolios that span multiple business units..........4
Strategic Business Units...................................................................................................................6
Diagram representing the relationships of the business units with Telstra.....................................7
2. Source of Sustainable Competitive Advantage:............................................................................7
Sustainable competitive advantage for Telstra across the Strategic Business Units.......................7
Four factors of sustainable competitive advantage for Telstra........................................................8
3. Corporation Revenue Centres:.....................................................................................................11
Identification of Revenue Centres..................................................................................................11
Product and service lines creating greatest revenues for Telstra..................................................12
Table of revenue for business unit within Telstra..........................................................................13
4. Identify the extent of the corporation’s diversification:.............................................................13
Identify which of the business units are related, which are related-constrained and which are
unrelated.........................................................................................................................................13
5. External Environment Analysis:..................................................................................................15
Operating Environment..................................................................................................................15
PESTEL Analysis...........................................................................................................................15
6. SWOT analysis for business units................................................................................................19
7. Merger, Acquisition and Downsize:.............................................................................................24
Recommendation for future strategic merger, acquisition or downsize of Telstra........................25
Conclusion..........................................................................................................................................27
References..........................................................................................................................................28
2

Table of Figures
Figure 1………………………………………………………………………………………..8
Figure 2………………………………………………………………………………………13
Figure 3………………………………………………………………………………………14
Figure 4………………………………………………………………………………………19
Figure 5………………………………………………………………………………………20
Figure 6………………………………………………………………………………………28
3

Introduction
Telstra is one of the largest and leading telecommunication and information service
organization, and it’s also one of the largest internet service provider and mobile operators.
The company offers its services mostly at home and at a business with core access, local,
mobile and internet services, as well as long-distance telephone call services around Australia
(Philip, 2000).
Telstra Corporation Limited is the Australian company, which mainly works for the
information and communication. It includes both international and local customers, and it had
even made its strong position in the Australian telecom market. The headquarters of the
company is located in Melbourne, and mostly all its operations go in Australia. In the year
2013, the organization workforce was around 37721 people (Telstra Annual Report, 2004).
Telstra commands to approximately 45.2% of the total market share within the mobile sector
in comparison to the competitors like Optus as well as Vodafone that includes the market
share of around 28.8%. It depicts the products of Telstra, which have a better appeal and
make it as the leading player in the market (Walker, Boyd, Mullins and Larrece, 2003). The
brand of the company is even strong, and that’s the reason it can profoundly penetrate in the
new niche market efficiently.
The position of the company has also enhanced by the bundling strategy, which places
focus towards good quality services like Pay TV, mobile voice, fixed-line voice services, as
well as fixed-line broadband. For Telstra to attain its position, it had taken various steps for
enhancing their product quality (Telstra Corporation, 2017). This report will also depict how
the company made strides in improving its competitive position in the market. This report
will also include an introduction to the operations and business units of Telstar. Along with
that, it will also include environmental analysis, SWOT analysis of the business units, which
4

supports in analysing the strategies of the company; corporation identification, factors that
result into the sustainable competitive benefits for the company. It will also discuss corporate
revenue centres of the company. Through environmental analysis, this report will be able to
analyse the current and future progress of the company. Finally, a conclusion will be included
that highlights the critical points of the report and draw a concluding statement.
1. Corporation Identification
Identify a corporation with product or service portfolios that span multiple business units.
Telstar is the popular as well as leading telecommunication organization that provides
complete communication range services and also try to compete in the market of
telecommunication. The company offers 17.6 million mobile services in Australia, and along
with that, it provides 5.1 million services of fixed retail voice and 3.5 million services related
to retail fixed broadband (About Telstra, 2017). The company philosophy believe that it
should connect with the people, and there are considerable opportunities in the market, and
that’s the reason, they support in creating the right attached future for each person. That’s the
reason, the company try to build the content solutions and technology, which is quite simple
and comfortable, and include fastest and most extensive national mobile network in Australia
(Westaway, 2015).
The company also strive towards serving and understanding its customers in a better
way, and also provides the selection of its digital connection, along with digital content.
That’s the reason, Telstra has global presence spanning in around 20 countries of the world. It
is noted that in the 21st century, opportunity relates to the governments, connected business,
individuals, and communities (Yu, 2015). As Telstra is the leading information service and
telecommunication firm, it feels proud in supporting its customers in enhancing the ways
through which they work and live by the connection.
5

Telstra is the accessible and largest mobile telecommunication offered in Australia,
including digital GSM network, which includes 94% of the total population as well as the
facility of international roaming in around 65 countries (Telstra: the company, 2015). The
company has also launched their second digital mobile network, which relies on CDMA
technology. The company expects to have the digital CDMA mobile network for offering the
vast range of high quality and coverage services for their customers.
Identifying the significance of internet and data services for the future and potential to
transform the telecommunication industry nature, the company tries to review the operations,
business, and network for assessing the changes needed to compete in the fast-growing
market of information effectively. The company has also set up individual strategic business
units, which is highly responsible trades expanding the wide data products range and towards
developing the business, which is content-based like e-commerce, internet, directories and
pay television services (Top 10 risks in telecommunications 2014, 2014). The company has
also set up the strengths in its products like electronic directories and internet access. For
instance, Telstar provides the highest internet service provider within Australia, which has
included around 400000 internet subscribers by the year 1999, along with that, they also
launched the website of Australian Yellow pages, which is one of the most popular and
frequently visited the site within Australia (Pearce, 2017).
Telstra has seriously devoted their resources in the current years to upgrade as well as
modernizing the system and network. This program has supported the company in enhancing
the expansion and flexibility of its wide range of both products and services, through which
the company can provide customers in the traditional telephone markets, internet markets,
emerging data, as well as mobile telecommunication market. This enables the company in
maintaining their revenue through telephony market as well as services to grow and generate
revenue in the market (Janda, 2013). From the last many years, the company is emphasizing
6

the operating efficiency and is also trying to change the corporate culture to become highly
commercial and customer oriented.
Strategic Business Units
Commercial and Consumer- it offers the services to around small business customers a well
as seven million residents. The core activities of this business unit are the installation of
customer service, sales, repairs, management and billing information, payphones and
connection services (Telstra Corporation Ltd (TLSYY.F), 2017). Consumer and commercial
are also responsible towards maintaining and building the network for customer access in
case of the Network and technology group.
Telstra business solutions- it offers and sells out the customer service is the highly
comprehensive manner of services, products, and customer-driven solutions for the
sophisticated voice of core telephony and data networks (Telstra reaches into China with
Pacnet Business Solutions integration, 2015). The business units serve both the medium and
considerable businesses in Australia and New Zealand.
Telstra OnAir- it is highly responsible towards the customer service, sales, pricing,
development of product and investment in the wireless and mobile communication and
managing the new CDMA digital service launch.
Telstra Wholesale and international- it offers the wholesale services and product to various
other carriers, critical domestic internet service providers, carriage service providers, pricing
strategies, and wholesale products (Barker, 2005). It is also responsible towards the
international wholesale as well as international retail business, include overseas investments.
Telstra Convergent business- it offers the considerable range of activities, which includes
development and data management, e-commerce, internet, multimedia business, and
directories. It also tries to manage the investment in IBM Global services Australia,
7

FOXTEL, as well as Advantra, and current 5% of Computershare Limited equity investment
(Media, 2018).
Network and Technology Group- it is highly responsible towards designing, planning,
construction, operations of local, global, fixed as well as mobile telecommunication and other
related systems for delivering services, products and customer help (Is Telstra Air A lot of
Hype or Hot Air and what are some of the facts, 2015). Network and technology group is also
responsible towards Telstra Research laboratories and technology strategy.
Diagram representing the relationships of the business units with Telstra
Figure 1
2. Source of Sustainable Competitive Advantage:
Sustainable competitive advantage for Telstra across the Strategic Business Units
Currently, Telstra provides various advantages to consumers along with competitive
benefits and different other telecommunication carriers, which operate within the market of
Australia, which includes, large identified brand, massive range of services that are offered to
consumers (Anderson and Rungtusanatham, 1994). It also controls the mobile infrastructure
8

as well as fixed line infrastructure; geographically coverage of network all around Australia.
It also includes distribution channels, which make sure about ease of access through
consumers to the representative of Telstra and customer service through Telstra Shops
owned/operated through retail outlets, On-Line retail outlets along with other retail outlets by
the support of Telstra Licensed Dealers. Bing a setup company, Telstra ensure the operating
and corporate stability of consumers (Barrile, 2009). It also includes the financial stability
that moves over the ability for funding the projects of research and development like 3G.
Dominance over most of the telecommunication and infrastructure of Australia
permits Telstra to provide coverage of consumers and network access around Australia, while
simultaneously, it dictates to a specific extent, and emphasize over competing carriers by
wholesale division of Telstra (Bayo-Moriones, Bello-Pintado and Merino-Diaz-de-Cerio,
2011). Along with this, new technology arrival, such as 3G offers Telstra with the
opportunity to provide different products and services like i-mode.
Four factors of sustainable competitive advantage for Telstra
In present competitive business environment, organizations are rapidly emphasizing
over the attention to offer quality products and services. Enhancing and maintaining the right
quality is the competitive benefits, which business companies can easily capitalize to keep it
and to expand the share of the market (Beckford, 2002). Improvement in quality at Telstra is
highly driven by the desire towards maintaining the control of dominant market within
telecom industry in Australia. Four factors lead towards sustainable competitive benefit for
the company, these are economic, social, environment as well as strategies, and the same are
discussed below:
Economic Imperative- the economic imperative is the critical driving force that brings quality
enhancement at Telstra. The quest of the company towards attaining quality is resulted
9

through the requirement to provide better services and that too at competitive prices for
earning good profits. In this context, efforts were taken by an organization to improve the
efficiency of both the operational procedures and processes (Bendall-Harris, 1994). In result
of this, economic preferences of the company are enhancing importantly with time. In the
2011 financial year, for instance, the revenue of the company amounted to around $25304
million, and the profit was $3231 million. Due to the enhancement of quality, the revenue and
profits of the company are enhancing steadily. By the 2013 financial year, the revenue
increased by $25678 million, and the profits shot up to $3813 million (Telstra, 2013).
Social imperative- As per Brown and Wiele (1996), the social imperative is referred as the
driving quality enhancement at Telstra, which moves around creating value for the various
stakeholders like employees, community, suppliers, government, and customers. This was
attained through the corporate social responsibility of the company in areas like consistent
payment of government tax, creating a job, preferred dividends, and right remuneration
packages it also emphasizes over providing better quality services, not only for the customer
base but even for the community (‘Telstra Corporation Limited SWOT Analysis,’ 2014).
Along with this, the quality enhancement efforts of the company have included the resource
use and its products for the advantage of the community, in which they are working.
Environmental Imperative- According to the economic imperative, Telstra achieve the
sustainable competitive benefits through its quality improvements in case of caring out the
resources and safeguarding the environment (Barney, 1991). Mainly, the organization has
taken efforts to make sure, that it attains enough consumption of energy with the minimized
greenhouse gas emission. The organization is also attentive towards the radio frequency
radiations, which are applied in the sector of telecommunication (Daft, 2006). Along with
this, the company has also created its policies that intend towards minimizing the resources
consumption like paper and water.
10

Strategic targets- Business organization quality improvement is related to strategic
significance. Once the organization can rapidly provide quality items, then it can achieve the
competitive befits over its competitors in the market (De Wit and Meyer, 2004). The strategic
targets of Telstra in context of quality improvement includes the operational touch, strategy,
administration, and long-term objectives and normative decisions. In the context of
operations, Telstra intends towards constructing the new strategy for the business, which pegs
towards the network services. It also emphasizes over the expansion in the Asian market and
even interested in venturing into eHealth and various options for attaining long-term benefits
in areas like global application and digital media (Kotaku, 2015).
As per Kotler and Keller (2006), it also aims towards attaining the quality
enhancement by administrative actions, which emphasize over aligning the organization with
the operational strategy. In the context of administration, the organization often look towards
the changes in the portfolio, which aims towards enhancing quality. All these changes include
business unit creation that is known as Global Enterprise and Services, that core
responsibility consists of the global network application, platforms, Telstra ventures as well
as international applications services (Mintzberg, Ahlstrand and Lampel, 1998). Telstra retail
also tries to create with the aim of integrating with the retail segment of the company. This
division also emphasizes overdriving the different eHealth departments and the same will be
administrated according to the enormous administrative practices of customer service,
innovation, marketing, and sales service (Phahalad and Hamel, 1990).
Telstra conduct review for its long-term strategies by aiming for correct attention in
the right way for attaining the long-term value. For instance, the organization has changed
their customer orientation. For example, the organization has shifted its focus to the
satisfaction of customers, to initiate the value of shareholder (Porter, 1980).
11

The organization also undertake normative decisions relying on the decisive
influence. It is noted that head of the department often tries to facilitate the subordinates in
making a decision and in some instances head of the department take a decision, they try to
consult the teams. In cases related with the scientific or technical decision is undertaken, the
leaders of the company usually try to delegate the work, such as decision making is given to
the appropriate experts working in the specific field (Porter, 1985). These decisions, for
instance, includes the environmental effect assessment related to the possible effects that can
come on operational environment of Telstra (Porter, 1991). This approach makes sure that
decisions taken should be right and achieve the required help from critical stakeholders.
3. Corporation Revenue Centres:
Identification of Revenue Centres.
Telstar retail income includes the Telstar consumer and business, which was hugely
flat, excluding the effect of mobile terminating access service (MTAS), as well as regulatory
decisions of 0.2%. As per the report, the impact of MTAS income reduced by 2.1%, which
comes to around $16489 million (Telstra Analyst Briefing- half year results presentation
pack, 2015).
International Enterprise and services (GES) positively respond towards the increased
sale and meet the product portfolio of Telstra, because the GES income has risen by around
1.6% that comes to $6343 million. The domestic income of GES has been increased by
approximately 2.5%, because of the double NAG growth (Telstra Annual Report, 2015).
Telstar Wholesale income has increased by around 7.2%, which is approximately
$2830 million, and it’s mainly due to rise in nbn™ ISA ownership, that has raised with the
rollout of NBN. Excluding the MTAS effects as well as fixed line service as well as Final
12