Telstra Company Report: Business Operations, Analysis, and Strategy

This report provides a comprehensive analysis of Telstra, a leading telecommunications company in Australia. It begins with an executive summary and introduction, outlining Telstra's services, market position, and global presence. The report then delves into the industry overview, examining the growth and characteristics of the telecom sector, including key players like Telstra, TPG Telecom, and Optus. It analyzes the legal environment and external environmental factors using PEST and SWOT analyses. The PEST analysis covers political, economic, social, and technological factors influencing Telstra's operations. The SWOT analysis highlights the company's strengths, weaknesses, opportunities, and threats. The report concludes with an overview of Telstra's business operations, financial performance, and strategic initiatives, providing a detailed understanding of its market position and future prospects.

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Date: 08 September 2017.

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Executive Summary
In this report we will dicsuss about the Telstra company, which is one of the biggest telecommunication
company in Australia. The various business that the company faces in ist operatiosn will be discussed,
along with an analsyis of the internal and external factors of the company and its competitors. The
report has many parts that discusses about the various aspects of the company and its large scale
operations. A brief report is presented hereunder in repect to the same.
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Contents
Introduction …………………………………………………………………..3
Part 2..............……………………………………………………….……....4
Part 3..............……………………………………………………….……....5
Part 4..............……………………………………………………….……....5
Part 5..............……………………………………………………….………8
Part 6..............……………………………………………………….……...10
Part 7..............……………………………………………………….……...12
Conclusion..........................................................................14
Refrences.....……………………………………………………………….....15
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Introduction
Telstra is one of the biggest telecommunication companies in Australia that provides hands on
services to the people in the field of media and digital communication. Telstra is a leading producer of
large number of mobile phones, prepaid mobile, digital broad band services and other services to the
people. In Australia they provide 17.4 million mobile services and 3.5 million broadband services. It has
been in the business from past many decades and has been giving stiff competition to many other
telecom companies that operate in this field. They mainly try to use the new generation technological
updates to provide solutions to the people and aims to provide the largest and the fastest telephone
connection to the Australians (Abbott, Daugherty, Parker, & Peters, 2016). The company has also
ventured into other fields and has a large human resource that effectively manages all its operations.
They are not only actively present in Australia but functions in many other international countries also.
They aim for having a global presence in as many as 20 countries in different parts of the world. The
business is growing with revenues running into billions. The audit of the company is an important aspect
of it that helps in understanding whether the financials are able to show the true state of affair of the
business (Chariri, 2017).
As per the annual reports of the company the major investing activities consists of payment for
property plant and equipments and payments for the various intangible assets of the company. The
major financing activities of the company includes share buyback, repayment of financial leases, finance
cost paid, dividend expenses all are part of the financing activities.
The financial statements of the company are prepared as per the , International Financial Reporting
Standards and Interpretations and as per the Corporation Act 2001. The statements are prepared to
make sure that the books of the company are showing a true and fair of the financials of the company.
All the necessary accounting and auditing standards have been followed and the same has been stated
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by the auditors of the company (Das, 2017). The books of accounts of the company are prepared as per
the going concern basis and the same has been declared in the director’s report. The notes of accounts
of the financial statements have been prepared in brief where all the important points are highlighted.
The company is growing exceptionally well and is trying to expand their area of operations.
Part 2: Industry overview
The Telecom industry in Australia has been growing since the last ten decades with the growth
in technology. The digitalization era is characterized by strong data transfer and network requirements
that will help in development of the telecommunication industry. There are large number of companies
that are working in the telecom industry and there is healthy competition is there that has helped in
development of the services that the end consumers receives. The main characteristics of the telecom
industry is high speed internet, effective cloud designing and storage and transfer of data over the same.
There are many new avenues that have opened in the telecom market (Fay & Negangard, 2017). Every
industry now requires high speed data to operate efficiently and that has improved the demand of the
telecommunication industry. The main element that is responsible for the success of this industry is the
presence of strong data analytics and that is seamlessly been incorporated in today’s era. The industry is
driven by strong technological innovations an development (Grenier, 2017). There has been huge
growth since the past decades and the same is expected to continue in the coming years as the demand
for the internet increases and the entire world is going towards digitalization.
If we go through reports today the annual revenue that the telecom sector is generating is $40
million in 2016.The overall growth has been 20 percent. The major player in the market is TPG Telecom,
Vodafone, Telstra, Optus etc. Telstra has the highest market share in this industry and is also the top
companies that have been expanding to many other countries also (Grenier, 2017). The market is
extremely flexible at the lower levels where easily operators can enter but mainly three four companies
dominate the overall market and is responsible for its growth and development. They are all working
towards providing content services to the consumers.
The major critical success factor in this type of industry is the amount of digitization they are
ready to bring and the amount of innovations that are being introduced that will help in providing better
services to the consumers. There are so many services that the companies are providing to the
consumers like mobile services, internet, dth services, along with the latest introduction of the cloud
computing services that are used by so many companies for storage their data and their overall
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operations (Jones, 2017). The few threats that this industry faces is that entry is very easy in the lower
levels where small operators can easily take over this may destroy the business of the top companies in
some way or the other. Because the small companies are providing same services at the cheapest prices
none of the customers will be ready to pay expensive prices to the big companies. This has increased the
total amount of competition. The company is now defined by cloud computing and other digital services
and the companies often face security risks because the data can be lost and there are many hackers
that unethically try to make misuse of these information (Knechel & Salterio, 2016). Thus security is an
important concern for these kinds of companies. The reach of these companies have improved a lot over
the year. In case of Telstra it is not only the leading company in Australia but is also trying to operate
effectively in other parts of the world. The companies have strong expansion plans and are trying for the
same (Maynard, 2017). As we see through the annual reports, the revenue of the company runs into
billions and the company is also investing a lot in research and development that has helped the
company in bringing changes to its overall processes.
Part 3
The legal environment of the company is characterized by the various rules and regulations that
the company requires to follow and the various steps that they need to take to maintain the same. The
companies need to prepare their financial reports as per a particular framework and in case they deviate
from the same then they will be penalized. The management of the company can be held liable in cases
there are any loopholes in its functioning. The government rules and all the other legalities must be
properly followed (Muller, Ward, & Moodley, 2017). The companies must pay the respective amount of
taxes as and when required. They need to make sure that the employees of the company are following
the same and are preparing the books as per the prescribed guidelines. The legal environment that is
there in Australia is flexible in a way that the importance is given to the substance then to the form of
any legal need and any issues arising from the same
Part 4: External Environmental Factors
PEST ANALYSIS
The Pest analysis is a type of analysis in which the overall legal social economic and political factors that
affects the functioning of any company are discussed in details. In the given section, we will do a PEST
analysis of the Telstra Company and see what those factors that affect this company are
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Political Factors
The main political factors that regulate the economy and the telecom industry are that there are a lot of
regulations, trade barriers, national radio spectrums and network licensing that the company has to deal
with. The operators that are based in the lower levels of the industry do not feel the affect much but
those that are operating at the highest levels have a lot of issues because of all these regulations. But
now days a lot of privatization and deregulation has occurred that has helped the companies a lot. This
has helped in the overall development of the top companies because there are less amount of
government intervention and also fewer issues that are related with human rights (Muller, Ward, &
Moodley, 2017).
Economic Factors
Economic factors are those factors that affect the GDP of the economy and are characterized by the
demand and supply effect and the overall purchasing power of the consumers. The main economic
factors that had affected the telecom companies in the past have been recession due to which these
companies were spending less on the telecom expenses. Telecom expenses are not a necessity and
hence when the income is low, people avoid spending their money on it. The overall changes in the
technology have brought a lot of changes in the economy and there are free trade barriers because of
which entry and exit into the market has become easy.
Social Factors
The social factors are characterized by the needs and the taste of the people. The main factors are
governed by what the consumer needs and what does he spends his money on. With the increase in the
usage of internet, people are ready to spend a lot in the telecom services. It has socially affected a lot of
lives by making the process of data transfer extremely easy and flexible and has helped in improving the
overall business of these companies.
Technological Factor
Technology is the main factor that affects this kind of industry. It is very important that the companies
bring new innovations in their services with the help of the technology. It is a very necessary in this era
of digitalization. It affects the overall growth and development of the company and has also helped in
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making the overall telecom sector more commercialized. It is the main essence of the technological
business.
SWOT ANALYSIS
Strengths
Telstra is the leading telecommunication company in Australia. It has a wide range of service related
portfolio with many diversified products. It has one of the strongest consumer bases and has also
expanded in other countries as well (Werner, 2017). It has a strong employee base with more than 35
thousand employees that are operating in more than 230 countries and cities of the world. It also has
major sponsorships in large number of sports event
Weakness
The major weakness of the company is that its overall liquidity position is very limited and also there is a
very tough market segment that has increased a lot of competition as there are so many companies
operating in the same industry.
Opportunities
The major opportunities that the company has are that the demand for the telecom services is
increasing at a fast speed. The growing IT services market is a proof that the demand for the high data
services will increase. The launch of the new 4G broad band data services has also opened new doors for
the company. The company also has undertaken various strategic growth initiatives that has helped in
their overall growth and development.
Threats
The major threats that the company faces is that there is large amount of competition in the industry.
This has posed a great threat to its overall market share. The various rules and regulations of the
company and the various IT acts make it difficult for the companies to function smoothly. The changes in
the technology is happening at a very fast pace which makes it difficult for the companies to cope up
with the same. These are the few of the threats that the Telstra Company faces in the
telecommunication industry.
Porter Five forces analysis
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The Porter Five Forces Analysis is related to the various threats that the company faces with regard to
the competition and rivalry that is present in the market. In the given case we see that there are many
top players in this business which makes the competition very stiff. The companies also faces threats
from new entrants as entry and exit into the industry is easy at the lower levels. The low level operators
provides cheap services and hence people are willing to take form them only. This affects the business of
the top players (Venezia, 2017). The other related cost that affects the growth of the company is the
total cost that the company needs to the security services and also the overall cost of the research and
development that the company is undertaking.
The various external factors that affects the company are technological changes that are happening at a
very fast speed and the companies often find it difficult to cope up. The companies needs to be in
synced with the same else they will lose on a big consumer base and that might affect their overall
operations and functions (Sweeting, 2017).
PART 5 : BUSINESS RISKS.
Auditing is a process by which the auditor checks the books of records of the company and
comment whether they have been prepared effectively or not and are showing a true or fair view or not.
The three types of audit risks are detection risk which occurs when the auditor fails to detect major
errors and issues. Inherent risks that occur because of certain factors that is not in the control of the
management and control risks that occur when the management fails to employ effective control
methods. Identification of the risk and reducing the same is a very important part of the overall audit
process.
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a) Industry development: The main risk that is associated with the industry is that entry
and exit is very easy that the lower levels. This increases the overall competition.
b) New Product and Development: With changes in the technology occurring at a fast
speed, it has become difficult for the companies to keep in sync with the same.
c) Expansion of the business: The market of the business is already having many big
players like Vodafone and TPG Telecom that makes expansion very difficult during those times.
d) New accounting requirements: Every now and then new changes are being introduced
in the already existing reporting framework, which makes it difficult for the companies to
comply with the same.
e) Regulatory requirements: In case of the telecommunication business there are a large
number of rules and regulations that the business has to follow for its overall development.
f) There are a large number of issues that are associated with the current requirements as
a large number of companies find It very difficult to comply with.
g) In case of use of data analytics and cloud computing, the companies need to maintain
the highest level of data security, else the companies might lose very vital information. Thus the
need for effective IT practices is very genuine
h) If the companies do not do proper research and analysis before implementing the new
strategies then the companies might face huge amount of loss in case the new strategy fails.
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