Telstra Corporation: Applying Value Chain to Business Strategy

This report provides a comprehensive analysis of Telstra Corporation Limited, Australia's largest telecommunications company, using Michael Porter's value chain concept. It identifies Telstra's mission and objectives, focusing on simplifying product offerings, streamlining operations, and leading in cost reduction. The report details Telstra's competitive strategy, which centers on cost leadership through effective supply chain management and differentiation by offering a wide range of products and services. A tailored value chain model is presented, highlighting key value-adding processes such as marketing and sales, and after-sales services, explaining how these contribute to customer and shareholder value. The analysis underscores the relevance of the value chain concept in breaking down and streamlining operations to enhance competitive advantage, improve customer experience, and boost shareholder returns through a widened customer base and reduced production costs.

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Telstra Corporation Limited was founded in 1975 is the biggest telecommunications company
that operates and creates markets, voices, networks, internet access for mobiles and other
services and products within Australia. Its headquarters are found in Melbourne and employ
about 32000 persons with around 150 subsidiaries within Australia. Telstra Corporation Limited
mission statement is, "We build technology and content solutions that are simple, easy to use and
valued by our customers." In regards to its mission statement, Telstra aims at serving and
knowing its clients more than any other rival firms in the telecommunications industry
(Schenkel, 2014). Telstra has the following objectives that help to shape its operations towards
serving its clients within Australia.
i. To thoroughly simplify all the product offerings, address customer complaints, and create
experiences in the digital world.
ii. To significantly easy its structure and methods of operation so that its employees and
clients can be empowered
iii. To be the industry's primary program for cost reduction as well as portfolio management
Micheal Porter developed the value chain concept in 1985 as a tool for facilitating analysis of an
entity's value and relative costs in its operations. It is mainly used to comprehensively analyze
necessary actions of an entity to depict information on the available source that can give an entity
a tremendous competitive advantage over its rivals. Porter hints that competitive advantage is an
element which should be fully understood by considering the level of rivalry that exists in a
given industry (Porter, 2010). As such, the value chain is a useful tool for strategic management,
which can be utilized by leaders at Telstra Corporate limited to breakdown and organize its vital
operations. More so, the analysis and organization of strategic operations should be in a manner

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that delivers Telstra's competitive advantage within the Telecommunications industry either by
lower costs or higher prices.
Competitive strategy of Telstra Corporation Limited
Telstra competitive strategy is centered on cost leadership and differentiation that has
helped to maintain its competitive advantage within Australia's telecommunications industry.
Cost leadership has been mainly in the form of lower costs incurred during the development of
its products as compared to its rivals like Vodafone and Optus. The lower costs in product
development have been due to Telstra’s effective supply chain management which has identified
and utilized cheap quality raw materials from various supply units like Zen and Advantra Pty Ltd
(Roberts 2011, p. 150). The above supply units own scare and quality resources like switching
systems, wireless transmission systems as well as wired transmission systems, which are the
rivals have not effectively utilized.
Additionally, Telstra has also made use of a differentiation approach as a way of boosting
its competitive advantage. Differentiation approach has been in the form of production and
offering of a variety of products to its clients, which is not the case with Optus and Vodafone.
Some of the full range of products offered by Telstra Corporate Limited include; cable internet,
mobile broadband, low-cost internet, satellite internet, network services, among others. The
above wide range of services offered by Telstra has maintained customer loyalty due to enhanced
customer experience, thus boosting its competitive advantage (Young, 2010). From the above
discussion, Telstra is realizing significantly lower costs in production and fetching higher prices
for its premium services, which are boosting its competitive advantage at the expense of its rivals
like Optus and Vodafone.

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Value chain model for Telstra Corporation Limited
Telstra's infrastructure
(For example planning and financing)
Value
The
amount
that
clients are
willing to
pay for
the
services
and
products
available
Human Resource Management
(For example, training and recruiting)
Technology Development
(For example, market research and
product design)
Procurement
(For example, advertisement, machines,
services)
Inbound
logistics
Such as
collection
of data
Operations
Such as
assembly
and branch
operations
Outbound
logistics
Such as
warehousin
g and
preparing of
reports
Marketing
and Sales
Such as
advertising
and
promotions
After-Sales
Services
Such as
client
support and
installations
Support
Departments
Value adding processes

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Description of the two chosen value-adding processes of Telstra Corporation Limited from
the above Value chain model
Marketing and sales consist of undertakings that are conducted by Telstra to establish
mechanisms through which customers can purchase its services and products. Some of the
undertakings include; management of the sales force and advertising. Management of the sales
force is being executed in the form of recruiting and facilitating salespersons for its products and
services. The personnel is responsible for identifying potential clients for the company's services
by visiting the target audiences and deliver verbal information to various potential clients.
Management of the sales persons at Telstra is being executed in the form of employing result-
oriented strategies and setting high but realistic ambitions for the team (Pankaj 2012, p. 27). In
regards to advertising, Telstra is making use of mass and online media to deliver information
about its products to potential and target audiences within Australia. Mass media and Online
media advertising are being executed in the form of television adverts and websites, respectively
as far as dissemination of product information to target audiences are concerned (Constantinides
2011, p. 428). For example, customer value is being enhanced through consistent updates about
Telstra's products and services on televisions and Telstra's website.
After- Sales services are being offered to customers upon purchase of Telstra's services and
products. These services are in the form of software installations and customer support in the
way of guiding customers on how to utilize its services and products. After-sales services are
being aimed at maintaining effective utilization of the company's services and products as a way
of widening its customer base. For example, after-sales services are helping to attract new clients
to make use of Telstra’s products and services which is enhancing on the shareholder value in
form increased dividends. Moreover, increased number of clients means that Telstra is able to

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reap maximum returns due to increased sales and thus greatly increasing dividends margin to
shareholders (Stuart, 2011).
Comment on the relevance and usefulness of the information that I found about my
theoretical knowledge of the value chain concept.
I found out that value chain concept is an essential element in breaking down and streamlining
operations of an entity in a way that depicts various sources that can help to enhance its
competitive advantage. The causes may be in the form of product design and market research
aimed at producing better quality, which can be able to out-compete those offered by rivals in the
competitive business environment. The usefulness and relevance of the above information are
that it helps to create coordination and collaborations among various support departments while
executing different value adding processes. Moreover, value-adding methods are essential in
boosting the client's experience when they purchase and make use of a company's products and
services. Also, a company's shareholders are also able to realize enhancements in their dividends
due to the widened customer base facilitated by value-adding processes (Palmer, 2012).
Therefore, value chain concept is essential in boosting a company’s profits and competitive
advantage through widened customer base and reductions in the costs of production.

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References
Constantinides, E., (2011). The Marketing Mix Revisited: Towards the 21st Century Marketing:
Journal of Marketing Management, Vol. 22, p. 425–30
Palmer, C., (2012). Telstra details the benefits of social media service strategy: Technology
Spectator.
Pankaj, G., (2012). Competition and Business Strategy in Historical Perspective: Business
History Review, p. 25- 86
Porter, M.E., (2010). Competitive Advantage: Creating and Sustaining Superior Performance.
NY: Free Press
Roberts, J., (2011). Defensive marketing: How a strong incumbent can protect its position:
Harvard Business Review, 83 (11); p. 150
Schenkel, G., (2014). Creating a Brilliant Digital Future: Telstra white paper: Telstra.
Stuart J., (2011). The mobile commerce value chain: analysis and future developments:
Available from:www.sciencedirect.com.
Young, J., (2010). Using the customer's voice to design Telstra's new customer service
initiatives: Telstra