International Business: Telstra's Expansion Strategies Report

This report provides an executive summary of Telstra's international business endeavors. It begins with an overview of Telstra as a global telecommunications provider and examines its operations, including competition strategies, organizational structure, and control issues. The re...Read More

International Business
1

Executive Summary
International business is cross border conduct of business. There are various issues which a
company may face while engaging in cross border business. However it is also very lucrative as
it generates more revenue for a firm. The present study tries to understand the business
expansion of Telstra into the international arena. Telstra is the largest telecommunication service
provider in Australia.
At the onset the study introduces Telstra as a global telecommunication service provider and
discusses its operations. Further the study focuses on various competition strategies used by
Telstra. Further, the study tries to understand the organisational structure and control issues
which are faced by company while executing international business. Further the study tries to
understand the entry straggles used by Telstra to enter into international markets. As service
delivery is dependent on human resources, the study also discusses the human resource
management.
In continuation the study discusses issues and opportunities for the firm and concludes with
recommending improvement in infrastructure and service delivery to get better results from
international business.
2

Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Overview of the company and current operations...........................................................................4
Company’s International competition strategy................................................................................4
Organisational Design Structure and Existing Issue.......................................................................5
Entry Strategies used to enter other regions....................................................................................7
Operational control, production and distribution and supply chain management...........................7
Management of human resource across borders..............................................................................8
Key Issues or Opportunities for Management.................................................................................9
Recommendations for improvement..............................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
3

Introduction
International business is the conduct of business across borders (Cavusgi & Kight, 2015).
International business allows firms to grow in terms of customer base. It also helps to find new
markets (De Pablo, 2013). Through international business a firm can gain substantial growth in
revenue (Dlabay, 2010). Therefore, international business is an important function of
management in the present world. Many firms aim to become global through international
expansion
Overview of the company and current operations
International business brings in much larger market share for a company (Maude, 2014). It also
has its opportunities and challenges (Salacuse, 2010). Legal, ethical and cultural framework
across borders varies, leading to differences in business practices. Therefore, international
business strategies have to be assessed deeply.
Telstra is the largest telecommunication company of Australia (ACCC, 2017). Its main products
include telecommunication services like voice, data and pay television (Telstra, 2017). Telstra
has a considerable presence in Australia which it has generated through the use of acquisitions
and quality service delivery (Telstra, 2017). The firm has more than 50% market share in
Australia (ACCC, 2017). The firm has also expensed oversees (Telstra, 2017). It has been
present in the European markets since 1992 and has been providing voice and data services to
customers.
There is a huge and growing market for mobile phones (GSMassociation, 2012). Due to this the
market for telecommunication services is also growing. This opens a huge opportunity for
Telstra to sell its services across borders. (Telstra, 2017). The firm has partnered with various
companies and has expanded to US, India, Hong Kong, China and Singapore (Telstra, 2017).
The firm mostly uses partnering, joint venture and acquisition as a global entry strategy.
Company’s International competition strategy
Competitive strategy is the long term strategy undertaken by business organisation to enhance its
competitive advantage (Brady, 2014). Telstra has a huge market base in Australia and is trying to
4

expand its operations worldwide. For this purpose the firm has undertaken expansion based on
infrastructural development and partnership with major companies across the globe (Telstra,
2017). The firm has partnered with many Government agencies to develop telecommunication
infrastructure in developing and emerging countries (Telstra, 2017). This infrastructure includes
sub-sea cable network in Asia pacific region (Telstra, 2017). Such infrastructural development
gives the company a ready market as it can negotiate with Governments for market share based
on the infrastructure facility it has provided (Telstra, 2017).
The firm has also tied up with private companies in Asia pacific region to provide high value
communication network (Telstra, 2017). The firm has also heavily invested in
telecommunication to provide better and high speed connectivity in Europe and USA (Pearce,
2017). Therefore, through value service and infrastructure development the company has created
competitive advantage for itself (Czinkota, 2012). Another competitive strategy of the firm is to
invest in innovative technology development in the field of telecommunication (Telstra, 2017).
Its research and development drive gives it a massive competitive advantage (Telstra, 2017).
Therefore, focus of Telstra on quality and technology makes it better equipped to handle global
competition.
Organisational Design Structure and Existing Issue
Organisational structure identifies the process flow of communication and work direction with in
an organisation (Craig & Campbell, 2012). Most commonly used structures are functional and
divisional organisational structure (DuBrin, 2011). In a functional organisational structure there
are divisions based on departments and all the department heads report to a single authority
(Craig & Campbell, 2012). Such a structure is suitable in a medium sized company or a company
operating in only one country. In a divisional structure the firm divides the work roles based on
products, projects or subsidiaries (Craig & Campbell, 2012). This structure is suitable to
multinational companies. Telstra also follows divisional structure. This is shown in the following
diagram
5

Organisational Structure Design of Telstra
Source: Figure 1 Made by Author (2017) based on (Telstra, 2017) and (Craig & Campbell,
2012)
Therefore, Telstra has divisions based on different countries it operates in and then it has
departments within these countries. All the Division heads report to the chief executive officer
(Telstra, 2017). This structure helps the firm in maintaining control over various divisions.
Divisional structure works well for Telstra because it allows divisions to work in teams to
concentrate on single region. Further departmental subdivision helps in concentrating on singular
functions (Telstra, 2017). The major control issue which may arise for Telstra is competition
between divines (Craig & Campbell, 2012). These divisions may start acting independently and
start competing with each other for company resources. Divisional structure may also lead to
compartmentalisation which may lead to incompatibility (Craig & Campbell, 2012). Therefore, it
is important for the CEO to create a team to keep him aware about function of all divisions so
that he can control all the divisions well.
6
Chief
Executive
Officer
Head of
Country A
Marketing
Manager
Staff
Operations
Manager
Staff
Human
Resource
Manager
Staff
Head of
Country B
Marketing
Manager
Staff
Operations
Manager
Staff
Human
Resource
Manager
Staff

Entry Strategies used to enter other regions
Firms use various entry strategies to enter into global marks (Paliwoda, 2011). The most
common among them are direct investment where the firms creates direct infrastructure in the
host country (Cavusgi & Kight, 2015). Another common method is franchising where the firm
gives its licence to operate to a local firm based on certain specifications (De Pablo, 2013).
Another common way is joint venture or acquisitions where a firm partners or acquires a local
company to make a foot-hold in the host country.
Telstra has used joint ventures and acquisitions extensively to increase its market presence in the
global sphere (Telstra, 2017) Joint venture is a partnership between two firms preferably a local
firm so that the international firm can get ready customer base and the local firm gets a better
technology and expertise (Czinkota, 2012). On the other hand, in acquisition strategy, the
international firm completely acquires a local firm to get a ready customer base and
infrastructure (Czinkota, 2012). Telstra has entered into horizontal joint ventures such as the one
with Tata telecommunication in India (Telstra, 2017). Similarly, the firm tie up with SouFun to
get an entry point into Chiba (Telstra, 2017). It has also made vertical joint ventures in the area
of supply chain and back-end infrastructures (Telstra, 2017). Examples of such ventures are
partnership with Pacific century cybarways in Hong Kong to set up an undersea communication
cable.
In addition to joint ventures the company has also used direct investment as a strategy to enter
Europe and US markets (Telstra, 2017). In US the firm has also invested in communication
infrastructure and has laid down a communication cable linking Sydney and Hawaii (Telstra,
2017). The firm has also used direct investment in Japan and Singapore (Telstra, 2017).
Therefore, Telstra has mostly used Joint Ventures, partnering and Direct investment to enter the
global stage.
Operational control, production and distribution and supply chain management
Telstra is into service delivery. It delivers communication service. Telstra has directly invested
into communication infrastructure or partnered with companies like Tata Communication to
create production and distribution facilities (Telstra, 2017). The firm has communication cables,
communication towers and other infrastructure which it has developed by various methods like
7

joint effort or direct investment (Telstra, 2017). Through this communication infrastructure the
service is created and distributed. Operational control is managed through control towers where
the continuous supply of voice and data services is managed (Telstra, 2017).
The firm has contract with various suppliers who help in maintaining the infrastructure (Telstra,
2017). Therefore, maintenance through suppliers is done on a continuous basis so that
uninterrupted supply of service can be maintained (Telstra, 2017). These suppliers include
supplier of hardware as well as software (Telstra, 2017). The firm uses both traditional and
online method for distribution. The customers can purchase data from authorised retailers and
through online medium as well (Telstra, 2017). Therefore, the firm generates quality flow of
service with help of adequate supply chain and distribution network.
Management of human resource across borders
Telstra operates on a global scale. However, the firm has not yet reached the mega international
size that some of its competitors like Vodafone have (Czinkota, 2012). Like any other service
organisation the firm is heavily depends on human resources for delivery of services (Lovelock,
2012). The firm employs local people in various roles like administration, support, procurement
and finance (Telstra, 2017). However, the top leadership is mostly from Australia (Telstra,
2017). The regional offices reports to the head office in Australia. Additionally, the firm has
customer support staff to handle customer quarries and issues (Telstra, 2017) .The firm employs
local workforce at most medium and lower level positions. Therefore, the firm has a diverse
workforce.
To manage the diverse workforce the firm has incorporated a culture of non-discrimination and
respect for all races and cultures with in its workforce (Telstra, 2017). There is a uniform work
code and people are promoted, transferred and given increment based on set policies without any
discrimination (Telstra, 2017). Additionally, a culture of mutual trust and performance linked
appraisal is incorporated so that the workforce remains motivated.
As a service organisation is highly people driven, staff training is given importance in the
company (Kandampully, 2011). Communication sector goes through fast paced innovations and
changes. Therefore, the company keeps its employees up to date with the changes happening in
the sector (Telstra, 2017). Knowledge management is important in Telstra and employees are
8

encouraged to improve their skills and abilities (Telstra, 2017). Therefore, Telstra is a people
driven organisation with skilled staff and knowledge management.
Key Issues or Opportunities for Management
Management function in an international firm is complicated (De Pablo, 2013). The management
has to manage and maintain all functions in various countries. These regions may have varied
cultural dynamics (Czinkota, 2012). This gives rise to management issues.
Telstra is a huge company in its home ground but it is still small if we consider the international
arena (Telstra, 2017). Therefore, the management may face various issues in establishing
management roles and teams in different countries. The firm needs teams which understand the
basic vision of the company and also understands the cultural fibre of the host country (Czinkota,
2012). Understanding culture and creating communication techniques as per the culture is a
major issue (Paliwoda, 2011). This can be resolved by undertaking market research and hiring
skilled people to manage the teams in various countries.
Communication service is highly regulated in certain countries and laws and regulations very
(Czinkota, 2012). While running a business in these countries the management needs to have
thorough knowledge of these regulations (Maude, 2014). For example, in India communication
services cannot be sold without taking identification proof of the customer (De Pablo, 2013).
However, in UK and other European countries this is not mandatory (Paliwoda, 2011).
Therefore, understanding of legal frame work is must for the management in order to manage
business in different countries.
Global pricing strategies have to be managed based on the currency value, customer affordability
and mind-set (Czinkota, 2012). Therefore, the firm has to conduct independent market research
survey to determine pricing in each country. This puts a pressure on budget and hence is a major
management issue. Similar issue arises with communication or promotion strategy (De Pablo,
2013). The firm needs to keep in mind the cultural framework of the country in order to create
lasting impression on the customer.
If we consider management opportunities, communication sector is a highly growing sector all
across the globe (ACCC, 2017). In addition emerging markets are opening up and getting de-
9

regularised leading to great opportunism for communication firms to invest in these countries
(Telstra, 2017). This gives opportunity to Telstra to invest in communication infrastructure.
Therefore, Telstra has an opportunity to grow in new markets if it manages the various issues
properly.
Recommendations for improvement
Telstra is a huge company in Australia and has a presence in the global arena. The firm is a well-
managed firm (Telstra, 2017). However there is always scope for improvement. Following are
some of the recommendations for Telstra to improve its international business.
1. Telstra should extend its product line and offer other communication services other than
voice and date. Telstra has started offering fixed line network but it is not extensive
(Telstra, 2017). Additionally, it should also offer direct to home television services in
emerging markets. This will increase the customer base of the firm and enhance its
revenue.
2. The firm has a presence in emerging markets but it should try to enhance this presence.
Emerging markets offer a huge window for growth and Telstra must capture this
opportunity. It should increase its visibility in emerging markets through advertising and
should invest in servers and other communication infrastructure so that it can grow in
these markets
3. Telstra’s focus should be on improvement of distribution network in the various regions
where it is present. The firm can open point of sale display in supermarkets and sell its
products through super market tie ups. This will improve the firm’s visibility in emerging
markets
4. To popularise its voice and data services the firm should create awareness of its service
quality. Additionally, it should use tactics like price bundling and offer discounts for
customers who buy both voice and data services.
5. It is also recommended to the firm to enhance its research and development drive further.
International competition is tough and communication sector is highly technology
oriented which keeps changing at periodic intervals. The firm needs consolidated
10

research efforts to stay abreast in tough competition. Therefore the firm must have
research and innovation wing in each country of operation
These recommendations will help Telstra in creating better service quality and delivery across
the globe. Through these recommendations the firm can make its service quality better and reach
a larger customer base.
Conclusion
A global firm can run smoothly if it takes care of service delivery and quality in various regions.
Additionally, proper maintenance of cultural dynamics, human resources and supply chain and
distribution will help in better execution of the organisational functions.
11

References
ACCC, (2017) Telecommunications Report. [Online]
Available at: https://www.accc.gov.au/publications/accc-telecommunications-report
[Accessed 26 September 2017].
Brady, D. L., (2014) Essentials of International Marketing. New York: Routledge.
Cavusgi, T. & Kight, G., (2015) The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business Studies,
46(1), pp. 3-16.
Craig, T. & Campbell, D., (2012) Organisations and the Business Environment. New York:
Routledge.
Czinkota, M., (2012) International Marketing. New York: Cengage Learning.
De Pablo, O., (2013) International Business Strategy and Entrepreneurship: An Information
Technology Perspective: An Information Technology Perspective. Hershey: IGI Global.
Dlabay, L., (2010) International Business. london: Cengage Learning.
DuBrin, A. D., (2011) Essentials of Management. London: Cengage Learning.
GSMassociation, (2012) Impact of Mobile Technology on Economic Growth, s.l.: s.n.
Kandampully, J., (2011) Service Management: The New Paradigm in Retailing. NewYork:
Springer Science & Business Media.
Lovelock, C., (2012) Services Marketing : People, Technology, Strategy. New Delhi: Pearson
Education India.
Maude, B., (2014) International Business Negotiations Principles and Practice. Hampshire:
Barry .
Paliwoda, S., (2011) Perspectives on International Marketing. New Jersey: Routledge.
12

Pearce, R., (2017) Telstra to guarantee connectivity over key subsea cable routes. Computer
World, 16 Jan.
Salacuse, J., (2010) Teaching international business negotiation: Reflections on three decades of
experience. International Negotiation, 15(2), pp. 187-228..
Telstra, (2017) About Us. [Online]
Available at: https://www.telstra.com.au/
[Accessed 25 September 2017].
13