Telstra Essay

Intro-

Telstra Corporation Limited is a blue chip Australian company, which deals with telecommunications and technology. With Telstra’s conversion from a Government business Enterprise or in other words Government monopoly to becoming a privatized company was in the interest of improving efficiency and improving the sales of Telstra. Now Telstra conducts business under the public company legal structure. The company is under the quaternary industry sector as the company provides mobile services to 17.2 million customers within Australian borders. This makes Telstra, in terms of geographical spread, a national company as Telstra provides mobile services for Australians. Telstra’s geographical spread corresponds to the size of the company.

Telstra is undoubtedly a large company where in the mobile market, Telstra dominates the market share with 40.2% in 2015, and 41.8% last year. Telstra is able to generate capital easier due to shareholders as well as investment in controlled entities. These capital resources have enabled Telstra as a company to expand its size and to become a more efficient and more profitable business, into which has turned Telstra into being Australia’s telecommunication and Media Company which has a large workforce spanning over Australia, China, Hong Kong and the Philippines.

In any such large corporation there are numerous influences, which impact a company both internally or externally.

Telstra is no different, where there are multiple factors, which affect Telstra’s business activities and the way Telstra conducts itself in the aspect of management and dealing with their competitive situation.

External Influence:

With Telstra’s large market share, Telstra is constantly under competition from major companies such as Optus and Vodafone. Businesses aim to achieve a sustainable competitive advantage where in this case, Telstra would be trying to maintain their market share as well as increase their already large portion of the market.

Competitive situation is an external influence, whereby the companies that are affected by it have no control over it. In a way, the competition in the market is created through the growth and decline of companies in the same industry sector, where huge growth in a business could threaten another company or the decline of a business is a sign of heavy

competition.

In terms of competitive situation, there are four types of market concentration, with them being a monopoly, oligopoly, monopolistic competition and a perfect competition. A monopoly is a market share that is controlled by only one firm, and an oligopoly is one where Telstra is in right now, in which only a small number of major companies control the telecommunications and technology market. But in May 2015, Telstra was faced with the dilemma of increasing competition, along with other major telecommunication companies such as Singtel-Optus and Vodafone Hutchinson Australia, as well as the rise of smaller, MVNO’s (Mobile Virtual Network Operators), such as Amaysim and TPG Telecommuncations. The rise in competition has seen some detrimental impacts to Telstra. Such examples are the decrease in revenue and market share, and also, the potential to lose their customers to these MVNO’s who are cementing their place in the market by offering cheaper prices and also by increasing their revenue through expansion into European countries, such as the Netherlands, Germany and the U.K. This also leads to the loss in consumer and investor confidence, in which the decrease in company revenue is a sign of a business that is unable to cope with competition. As well as this, Telstra has no control over its competitive situation, in which it also impacts the way the company operates and delivers its services. The need to innovate their products becomes apparent, where Telstra must develop new strategies in order to respond towards their rising competitors.

The strategies that Telstra aims to implement, in order to compete with its competitors, is by introducing its 4G service to the customers and reselling it. Although Telstra makes use of MVNO’s in order to attract more customers, the smaller telecommunications companies have been able to become profitable through its arrival into the European market. The MVNO’s are smaller in terms of influence, in which Telstra makes use of its nationwide influence in order to be a part of the National Broadband Network (the NBN), as another strategy to attract a large number of customers in Australia. Where Telstra is fading away in the industry sector of communications, they aim to use their branches in the internet industry sector in order to cement their place as one of the largest internet and telecommunications companies in Australia.

An additional strategy, which Telstra has used to stay competitive, was to become more than just a telecommunications company but to also tap into other markets. By doing this, Telstra had undergone a large rebranding to make itself known as a technology brand, which incorporates the mobile, broadband and television services that it is famous for, as well as business services such as voice-over IP (VoIP), online video and managed network services. Telstra has also managed to secure streaming rights to broadcast live AFL matches. In response to entering the streaming market, Telstra has used uncompromising dealings to appeal to wider audience, which Telstra is trying to win over the “subscription content generation”.

In terms of the success of these strategies implemented by Telstra, the incorporation of the NBN has managed to cement Telstra’s dominant position in the market. In early 2016, the NBN managed to push Telstra to over 50 percent of the broadband market share, as well as the increase in dividends by 3.3 percent in December 2015. Telstra’s focus on business services has seen a rise in the number of small to medium enterprises that have become Telstra’s new customers. The use of its television services has also seen success in attracting more consumers, but its implementation of the 4G network is still highly contested among Optus, Vodafone and the MVNO’s.

Internal Influence:

In addition to the external influences that continually act upon as business there are also internal influences, which impact a business. The internal influence of management is an aspect of the Telstra Corporation, which can be controlled by the company itself. Management and the Board of Directors influence Telstra in its communications, attitudes and brand name.

As seen in the annual reports issued out by Telstra, it is clear that the company is managed with similar strategic priorities that have been recurring points in these reports. In Telstra, emphasis is placed on the management of the business because it influences in building new growth for the business, improving customer satisfaction, improving customer advocacy and simplifying the business where Telstra strives to deliver customer and revenue growth, network leadership and productivity improvements. To add on to the strategic priorities, 5 other core values were frequent in Telstra’s past annual reports. These values are another influence of management on the business in which they are: “Show we care, Work better together, Trust each other to deliver, make the complex simple and find our courage”. These values are representative in the way Telstra manages and conducts itself.

As well as this, management influences Telstra’s success in terms of company objectives and aims. Certain influences also include the business’ need for better management, or to improve the performance of the different markets that Telstra specialises in. An example of this was the use of a flatter organisational structure, in order to manage other sectors of Telstra. By using the decentralised management system, members of the senior management team are assigned to oversee different areas of the company, such as Chief Financial Advisor and Business Support and Improvement. This allowed for more control to be distributed in Telstra, and provided better performance over different operations and activities.

In 2010, Telstra had begun to restructure management in particular senior management. This strategy was a response by Telstra “ in an effort to regain lost in customer service” where Telstra had also wanted to “reshape capacity to deal with issues arising from the national broadband network”. This sort of response from Telstra would have been influenced by the company’s strategic goal of “improving customer satisfaction”.

But if we look 3 years later to 2013, there is a reshuffle of key management personnel. The purpose of this business move was to focus on “improving customer advocacy, streamlining operations and expanding into Asia”. There is an obvious shift in management here, in which if was changed to suit Telstra’s objectives and goals.

Rapid advances in technology, coupled with the significant pressures on businesses from increased competition due to forces of globalisation, have resulted in businesses attending their structures.

An additional example of how the management team, supervises the company’s reputation.

In 2016, Telstra experienced 7 outages, and two this year has seen Telstra spend $3billion worth on improving its network. In one of the outages, which had affected thousands of Telstra’s Internet customers, Telstra had come out with an apology statement where each customer who was affected by the outage was automatically given $25 worth of credit. To carry on with the role of management especially with Ceo Andy Penn, is his ability and expectation to maintain the investor confidence within the company. In recent times, Telstra has seen a decrease in revenue and value where Telstra has began to borrow money to keep up with dividend payments to keep shareholders loyal. This decrease is twofold. One is because of the competition, where Optus and Vodafone have both been revitalised in particular in the mobile market. Here is where Andy Penn comes in, he brings confidence that Telstra as a company is strong as Telstra has “as strong balance sheet” and a “good track record on the construction site”. In this case, Telstra uses the strategy of a management team in order to maintain consumer loyalty and trust, as well as the business’ reputation during the 2016 network

outages.

Conclusion:

To sum up, Telstra Corporation Limited like others businesses similar to itself such as Optus, undergoes numerous influences both internal and external where in this case management and competitive situation. It is now clear that through examining Telstra a business that is able to manage itself in a productive and clear manner coupled with staying competitive by offering a more effective and efficient service through putting the customer’s experience as a first priority is able to remain successful through the forever changing market and economy.