Australia Post: An Overview Of The Company And Its Place In The Logistics Market

History and Core Competencies of Australia Post

Question:

Discuss about the Case Study of Australia Post.

Australian Post Corporation now trades as the Australian Post. Established in 25^th April 1809 it is a government owned enterprise which provides postal service in both local and international markets.  In 2008 the country was serving one million service users. As it run by the government the company has an obligation to the public. The government business enterprise is self funding. It is the reason why the company finds letter delivering very exhausting.( Rakodi, 2014).  However, the company delivers around sixty million items weekly mostly on time. In the company the year 2010, Ahmed Fahour, the MD and CEO of the organization announced the launch of the “Future Ready” Strategy for the Australia Post.( Budzianowski  et ali, 2017) The strategy is aimed to bring a new structure and entry in the electronic market through the launch of “e-Services”. Though the company had incurred a loss of A$222 million in 2016, it got back in the game in the year 2017 due to a strong performance in parcel and courier performance. The company holds a strong position as compared to its competitors due to its core competencies. The company owns 4417 post offices, 15805 street post boxes and 12,400 vehicles; it makes the company hold a store share in the distributed logistics market.( Salem, 2014) In addition to that the company has over forty eight retail “superstores” thus making it a huge retail and service network.

Five-force Model

 The 5 force model comprises of the bargaining power of suppliers, bargaining power of buyers, rivalry among competitors, threat of new entrants and threat of substitutes. The five force analysis of Australia post can be understood by the following:

Bargaining power of suppliers: The bargaining power of the Australian post is dominated by the hike or decrease in the rate of fuel. However the company in recent years has introduced bikers, vans and sedans which have high fuel efficiency. Owing to this, the company has been able to counter such risks. It is also influenced by the taxes the company has to pay.( Anvari et al,2017) It company does not get any funding from taxpayers and has paid more than 1.7 billion dividend to the government in the past decade. The bargaining power is also influenced by the government policies. Since the company is a government business enterprise, the Australian government is the only share holder through the Ministry of Finance. Thus the company is obligated to perform its business operations with sound commercial practice, has a community service obligation. In addition to that the company must operate within the set framework of the government, international conventions and other governmental obligation.( Zeng et al2017) The cost of land increase along with the increase in rent also affects the company. The company seems to spend a lumpsump on these two criteria since it owns forty eight super retail outlets.

Bargaining Power of Suppliers and Buyers

Bargaining Power of buyers: This describes the effect that the customers of the company have on its profitability. The company seems to run an oligopoly in this segment.

Rivalry among Competitors: This is perhaps the most important segment of the five force model. In recent times, the position of Australia post has come under serious threat due to the upcoming business. In the area of parcel delivery international players such as Japan Post, and FedEx have together taken up a lot of business.( Whittaker et al2013),  Locally Australian post faces competition from Mailman and Parcel Point.

Threat of New Entrants: Though the company still holds a strong position, other companies have seeped onto the market to challenge its position .Like all other logistic business Australian Post faces stiff competition from companies such as FedEx Toll Holding and DHL

Threat of Substitutes- This becomes a matter of concern since customers always have the choice to change or alter its service providers. This becomes even more critical when new businesses enter the market.( .( Wan et al,2014)  The company landed itself in a bit of a problem when it started charging people who did not pick up their parcel on time. This proved to be a wrong step for the company as many alternative turned up to people who were disappointed by the stand taken up by the company. Companies like WizMe, Sendle Officeworks Mailman came to the rescue.

The dissatisfaction with the Australian Post has given opened up many windows of opportunity for other business in the industry to challenge the position of the government business enterprise.  Eminent few among them are FedEx, Toll Holding and DHL.

FedEx challenge the Australian Post by having a strong global network. The company has been successful in establishing a strong brand value in the market place. Fred Smith, the CEO of the company was a visionary.( Hollensen, 201) Due to his efforts the company changed the way logistics work across the world strong management is thus another attribute of FedEx.

The business strategy of Deutsche Post DHL group is build on the three pillars of focus, connect and growth. The company aims to focus on logistics s a part of their core business which will generate 85% of their total revenue by 2020.( Yan   et al, 2017) The pillar of “connect” helps the company to tap the expertise, experience and talent in the organization. Lastly through the pillar of growth the company aims to grow and develop the business. It aims to identify area where the business must establish a close knit collaboration to improve quality of service.

Rivalry Among Competitors

Toll Holding is yet another competitor of Australia Post and has a strong network in Australia. It currently dominates the local courier and delivery services and has a market share of 8.8 percent which is higher than that of DHL express which currently holds 6.7 percent of market share.( Närhi, 2015) In March 2015 Toll was taken over by the Japan Post and has announced a full commercial launch. The company currently owns 24000 offices and 200000 staffs.

The company’s iconic status as the leading Australian organization is marked by its commitment and responsibility to the environment.( Chen  et al,2014) To this end the company puts in a lot of effort to reduce environmental impacts, costs and conducts effective risk management and improvement in the customer value. Environmental responsibility is the intrinsic attribute of the company. In order to achieve this end company has launched a companywide Corporate Responsibility Strategy in the year 2016. The company objectifies to create value by reducing environmental footprints and by creating a more circular form of economy. (Barkauskas  et al,2015)The prime focus of the company is reduced carbon emission and to take up a responsive stand against climate change issues. Being an active member of the National Packaging Covenant since 2005, the company puts in a lot of research and effort in designing, composition and recycling of its packages. (Hoogendoorn, 2016).Climate change is one of the major threats the world is facing today, Australia Post has taken positive steps to counter the challenge. To this end the company has launched the first of Australia’s 100% electric commercial vans. The company has also introduced motorbikes, vans and sedans that have high fuel efficiency.( Cant and Wiid, 2013)

 The business strategy of Australia Post had been changing to suit the need of the modern times since 2015. The Company identified three key areas to work upon. The company focused its efforts to on retaining the current business position by investing in the postal and parcel facilities. The company worked towards turning its offices into ecommerce outlets for the benefit of customers of small business houses irrespective of their location. (Grinblatt and Titman, 2016).Secondly the company aimed to develop innovating means of ecommerce solutions, making it easy for customers to shop online.( Purce, 2014) This also created an opportunity for the business to grow online. In addition to that the company aimed to extend its service portfolio through digitalization which will act to the benefit of the Australian Government and other corporate sectors. Finally the company envisaged development by further investments in the growing domestic and international ecommerce ability by developing a low cost but effective parcel delivery model. In addition to this the company aimed at developing its supply chain solutions.

Threat of New Entrants and Substitutes

 In order to realize the aims of the corporate strategy the company attempts to bring about contemporary and relevant change in the services to meet the demand of its customers. Since the community is shifting away from the letter services at an increased rate, the company finds itself in a critical position.( Larson  et al, 2017) With the introduction of the Future Ready strategy the company has been able to retain the customer focus. The Future Ready strategy has been useful for adapting the products for both he physical and digital world, streamlining the operations better connectivity with customers and community.( Barney and Peteraf, 2014), With the launch of its Future Ready business strategy the company was able to gain almost a seventy seven percent customer satisfaction.( Puranam and Vanneste,2016)  The company aimed at providing the customers and consumers a twenty four hours access to the services. This was achieved by offering a twenty four hour zone in the new retail superstores.

“Listening to people “is the key leadership strategy used by the Australia Post. The strategy has been kept responsive and dynamic. Big or medium sized organizations usually go broadcast in their communication.( Strategy, 2015) It is for this reason a more crowd sourcing approach is required by the company. The new leadership strategy of the company comprises of five top priorities. First the company is trying to develop a new value position, by reconsidering the meaning of recruitment. Secondly the company has diverted its effort towards an increased technological advancement including more automation. In addition to these, the Australian Post is trying to change the brand image of the company from an HR organization to a marketing organization. Fourthly the company aims to focus on its onboarding activities.( Peteraf  et al, 2014) Finally the organization is trying to get a integrated view of talent. To that end both the talent team and development team s expected to work together.

Strengths: The Company delivers on Saturdays. The company has diverse a portfolio of parcels, mails, money and insurance. It is a self funded government business enterprise. The services provided by the company include postal services, digital services, retails, express posts, logistics and printing services. The company employs more than 30000 odd employees. (Sirén  et al,2014)

Weakness: The Company has a less international presence compared to its competitors. The company is taking time to switch to new solutions.

Key Competitors: FedEx, Toll Holding, and DHL

Opportunities: Since its prime competitor FedEx is currently focusing attention in the international market, the company has the opportunity to make a strong domestic presence. The company must focus on the global market, mergers and acquisitions.

Threats: Australian post is threatened by a loss of cash flow. The threat from competitors is increasing since they are acquiring other businesses in this industry.( Effelsberg  et al,2014) For example the acquisition of Toll Holding by Japan Post. There is a threat from the stiff competition since competitors are giving services at reduced price rates.

Recently, the Australian Post has announced the launch of developed Digital Id technology across various companies and government departments. (Bull  et al, 2016)Andrew Walduck, Australian Post Executive General Manager said that this facility will help customers to access important services online. The Digital ID will assist customers to open a bank account or to request a service. Many of the traditional post offices of the company have been digitized to enable customers to get access to the services anytime from anywhere.( Niederwieser  et al,2016) Irrespective of the devices used by the customer, the company’s digital development empowers the customers to manage their delivery and transaction with greater control, ease and security.( Chen  et al,  2014) With developed android application the company has made a benefit of a 23% rise in the digital product revenue, 38 percent increase in online mail and 39 percent growth in the online shops. (Rakodi, 2014).

Conclusion

Australia Post still has a future even if traditional letter delivery service may end up on beaten tracks. The company still has an edge over the competitors since the service it provides in the rural and communities cannot be taken over by its competitors, Apart from delivering letters, the company has a diverse portfolio which includes items important for trade and communication. It is possibly the only provider of these services in the regional areas. However the company must indulge in more digitization and technological development in order to deal with the threats posed by its competitors

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