TELSTRA COMPANY

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Executive Summary

The report provides a strategic analysis and recommendations for the Telstra Corporation Ltd, an Australian firm dealing with the telecommunication and the information services. The primary objectives are the analysis of the major strategic issues and their significance. Telstra is known for provision of reliable data and increased networking that ensures enhanced communication for the customers. The report outline challenges of the Telstra industry to include congestion in network traffics, poor network maintenance, poor customer services, and falling prices with increased demand. In addition to the convergence of rules, the strength of the industry is considered to be the establishment of strong infrastructure network across the country. This is achieved through the active and skilled force which supports the operations of the industry. However, there are service inefficiencies which limit the effectiveness of the Telstra industry due to the poor services to the consumers.

Introduction

Telstra Corporation, Ltd. is an Australian telecommunication and information service that has been operating since 1975. The services provide mobile, Internet and TV access not only regionally, but internationally in Asia. Currently, Telstra acts as the industry leader with market share of over 60%. It is continually implementing strategic decisions that help to benefit the business (Davidson 2005, p.88). Since the investment on infrastructural development in 2014, Telstra focused on the provision of improved quality of Internet access for their users nationwide.

Strategic Issues

            Telstra Company’s customer base is continuing to grow each day across a wide geographical region. Since company’s supply chain is increasingly becoming complex, its extensive provision of customer service is likely to face some challenges in the next 3-10 years. Telstra’s challenges have been reflecting in rising dissatisfaction of customer experience, which moved the company to the top of TIO’s complaint list last year. Both the shareholders and investors argue the ever growing competition in the rapid evolvement of technology. It endangers the delivery capacities of the company to 28% (Klettner, Clarke & Boersma 2014, p.148). The signs of decay are also evident meaning the flattening of the dividend fallen by 20%. There are concerns and fear of the key factors causing the emergence of the issues above.

Congestion in Network Traffics

            Telstra network provides Australia’s largest geographic coverage and fastest service that requires an extensive network of physical infrastructure. Although network traffic continues to grow exponentially with a 40% rise annually, the Telstra’s supply chain fails to provide adequate infrastructure and technological labor to maintain their service and foregrounds concern around the competency of the supply chain (Ceric, D’Alessandro, Soutar & Johnson 2016, p.5558).

Network Maintenance Problems

Telstra must also consider how their systems and supply chain are linked. The company still relies on older technology and systems that slow down and complicate how customers are served. These outages also result in large bottlenecks of customers waiting to be reconnected, causing a huge disruption and inconvenience to customers and considerable strain on Telstra operations.

Poor Customer Service

Poor customer service and a continued persistence to price its services at a premium have resulted in Telstra recording the worst scores against its competitors with respect to “value for money.” Although trying to ensure customers’ communication to build on strong relationships, Telstra managed many of these communication strategies badly with duplicate and competing interactions demonstrating poor customer management capabilities and systems.

Increase Demand with falling Prices

Telstra customers are considered to be averagely changing. Since the penetration of the mobile device in 2008 from thirty percent (30%) to one hundred and thirty percent (130%), nearly two Aussies are considered to possess smartphone which is internet-enabled with two to five people owning an iPad or related devices (Skelton 2015, p.48).

The Convergence Rule

For several years, the Telstra industry has responded to the increment in demand through increasing the range of its services. In situations of mere landlines, there is replacement with count mobiles, more internet access, the Foxtel and T-boxes. All these services are considered to operate within the discrete niche (Skelton, Paul 2015, p. 48).

Shift Acceleration by the NBN

There is replacement of the Telstra’s networks with the government owned which delivers very high speed by the national broadband network (NBN). According Wong, Chandran & Ng (2016, p.571), the tantalizing ability is deemed to remove the original business of Telstra and introduce network owning system to control margins, Prices and limit competition. This fundamental shifting is also acknowledged by the government that supports the industry through funding.

Failure by Mobiles to save Telstra’s Bacon

Due to the wreaking havoc by the NBN with the PSTN and the Big pond, Telstra has failed to get respite from it mobile business and services. The industry is likely to own the most technical and advanced network but the mobile business is considered to remain more inherently competitive. For success of the Telstra from its rivalries such as Vodafone and Optus, the company has to increasingly invest heavily in the current technologies. The threat form the manufactures of the mobile devices especially the google and apple, are considered to hatch the plans of the Telstra industry from producing more mobile phones.

SWOT Analysis for Telstra Cooperation

Strengths

Telstra Company is currently building strong network of infrastructure that will support its operations.  The move will not only ensure Telstra compete in the telecommunication industry but will also improve its performance by improving on quality of services delivered to the customers. Moreover, its current position in the industry as a market leader will ensure that the company continues to lead the market. The company has a pool of skilled workforce that has enabled the company to realize faster growth rate in the Australian telecommunication industry. Telstra have a strong monetary support base that provides constant monetary assistance. There is an increase in the desire to access the internet with rise in the usage of the cloud computing. This has led to the massive increase in the rate of data demand by the company. Previous studies estimate the demand to increase in growth from seventy percent (70%) to eighty percent (80%) in the next decade. The increase in the request for data has been found to be as a result of the steadily falling values and prices. The data prices have dropped from (1.8%) per each mobile bundle in the year 2011 to one percent (1%).The price deflation is, therefore, a long-term feature for the Telstra industry which would like to wipe out the benefits of the growth and is significant since it allows the company to consider better pricing index to the consumers.

Weaknesses

            As the company expands its geographical coverage, there are operation inefficiencies witnessed by the various cases of unsatisfactory customer service. Compared to other companies operating in the same market, Telstra suffers from latency issues. Besides, they charge higher prices compared to their competitors. A lack of physical facilities has contributed to ongoing congestion and multiple service outages this year, significantly affecting over eight million customers. This highlights a pronounced area for improvement in the development of additional physical infrastructure and fixed network services to increase capacity and deliver improved technological service.

Opportunities

            Business opportunities in the international markets like Asia-Pacific and China. There are a wide businesses and projects that the company can venture into. Besides, the company renews their focus on customer service to reduce the percentage of unsatisfied customers.

Threats

            The mobile market in Australian telecommunication industry is become more saturated leading to high competition. The government regulations regarding the industry are becoming complex. Further, the difference in government regulations from country to country may limit the Telstra entry into the international markets (Fram 2013, p.32). The rapidly changing technology and its application in the telecommunication industry limit the operations of Telstra Company.

Strategies

Inclusion of Suppliers in Product Development

            Suppliers play a vital role in ensuring quality products and services are availed to the consumers. A strategy to manage production cost must involve negotiation with prices and charges for the suppliers to reevaluate their prices and charges for the raw materials. Although Telstra Company has tried to set its subsidiaries like SouFun in China, establishment of subsidiaries are good indications that the company can effectively manage its assets and expand to other regions but may not guaranteed enjoyment of economies of scale in production.  A move to include suppliers in the company’s improvement plan may help in ensuring that the consumers of Telstra’s products easily access the services. Based on the quality of the services that Telstra provide to its clients, it is evident that they can establish a strong base that will enable them to obtain quality and prompt supplies from their suppliers as well as supply quality services to the Australian communication market.

Understanding Consumers’ Power Using Digital Platforms

Just like other players in the telecommunication industry, Telstra needs to utilize consumers’ power in improving their sales. Given that the current consumers of telecommunication services interact at different levels, they are able to compare the quality and cost of the services offered by different providers in the industry (Gardiner 2015, p.8). Besides, consumers of products and services by Telstra Company have the ability to choose between the many alternatives availed by Telstra’s competitors. Since factors like the prices of services and products are directly controlled by the market forces, consumers have the freedom to move from one service provider to another. Any change of the prices, quantity, and quality of products and services are likely to a cause a shift in the quantity demanded by the consumer. The quality of the services offered by Telstra ranges from basic to complex services. Thus, in Telstra can outdo their competitor os in the market by taking into considerations the prices charged in the market as well as the quality of products and services offered. This strategy will go beyond mere product promotions to ensure it gets constant higher sales volumes in the market.

Outdoing Competition through Geographical Expansion

The Australian government regulates the communication industry thereby restrict the entries into the industry. Competitors like Optus have been able to have a larger share of the market thereby controlling the marketing. The moves to set its subsidiaries around the country and the region have helped in gaining a competitive edge as well as reaching many of their customers across the region. The company uses adverts and promotions to outdo new entrants and other rivals in the market. Besides, product branding has also contributed to the manner in which customers distinguish and identifies with the products. Since competition exists in the telecommunication industry, product differentiation plays a major role in ensuring that there is continuous improvement in the products and services offered.

Continuous Product Development and Branding

There exists a continuous strategy adopted in product development so to help in meeting the changing market needs. Moreover, there are adjustments made on product and services prices to fit the clients’ abilities. Affordability of the products makes it possible to boost product sales.

Recommendations

            In order to overcome the challenges affecting its operations and eventually again a competitive edge in the already competitive telecommunication industry, Telstra Company needs to reevaluate the sources of its challenges, the SWOT analysis, and the outcomes of the various available strategies. The recommendations present significant opportunities for improvement, with Telstra planning to pursue significant technological advances such as virtualization and increased automation across network domains. They will ultimately help modernize operations and systems, eliminating time and resource inefficiencies along the supply chain.

Consequently, by reconsidering their focus and use of data, content and capability, there is significant opportunity for Telstra’s supply chain to deliver more value through improved customer service. According Jarzabkowski & Seidl (2008, p.1421), Telstra must reconsider how their supply chain delivers end value to their customer through the products offered. Telstra’s dominant presence has previously meant that they had a large target market and consequently the supply chain was traditionally designed based on standardized, high volume, low variation, and point-to-point movements optimized to achieve operational efficiencies. However, the growing modern technological environment has meant that customers now demand differentiated capabilities and tailored services, and Telstra must be responsive to the evolution of customer needs to remain competitive (Suk and Liu 2014, P. 289). This highlights a need for Telstra to transition to personalized, fully transparent, niche customer products to greatly enhance end value. However, the ability to deliver these solutions would significantly change the way the supply chain deliver services.

Reduction of the Congestion in the Network Traffics

Due to increased demand for the fastest and efficient reliable communication systems by the consumers on larger geographic areas, the Telstra should provide adequate physical infrastructure with increased technological labor. This is significant in the maintenance of various services and reduction of congestion. The company should also establish the fixed network services to their services to increase the delivery systems.

Efficient Customer Service Delivery

The Telstra Company should enhance the customer service through the provision of decent prices with increased interactions with the consumers. There should be more focus on the data usage, capability, and content for the deliverance of more value products to the customers (Bellin 2015, p. 76). The company should consider how its supply chain delivers the end value to the consumers through analysis of the products offered. The supply chain should be designed based on the high variation, high volume of goods, with maximum optimization in improving efficiencies of services provided. There should also be differentiation in the tailored services and the capabilities to the customers. The study also recommends for the positive response by the Telstra on the customers’ evolution in remaining competitive in the business. The company should also enhance transparent transition with enhancement of end value through the niche consumer goods.

Proper Network Maintenance

            There should be adequate and secure links between the supply chain and the systems of the Telstra Company. Telstra should rely on the modern technology and the systems which increase the customer services. Improved infrastructure should also be enhanced as this helps in the adequate and efficient establishment of proper networking systems.

Flexibility in the pricing values

The company should establish a flexible price on the products delivered to the customers. Small and average prices increase the demand for the products by the consumers. The convergence rules of the company should be reviewed on the services and products offered to the customers. The convergence of rules should therefore be reviewed to enable flexible charges or introduction more bundles for the replacement of charges.

Conclusion

Despite the calls or texts, young users mostly communicate online through various applications such as twitter and Facebook. This has been found to erode the pricing power of the Telstra industry. Text messages were being charged at twenty-five cents but currently are free on most of the mobile plans thereby creating problem on charges. When all the devices for which the Telstra charges are converging separately, the industry cannot therefore continue to justify the charges based on different prices to access the data. The Telstra business is useful in telecommunication and information services delivery to the citizens of the Australia. However, for the 3-10 years of development, the company is considered to register growth despite several challenges. Some of the problems include threats and stiff competition from rivalry industries. The congestion in traffic network with the associated poor network management system lead to poor service delivery to the consumers. This makes customers divert to services provided by other rivalry companies hence more competition.

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