Strategic Information Systems Essay: Telstra's Competitive Environment Analysis.

Competitive environment Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capabilities do the relevant firms have? What strategies do they follow? What threats do they represent?

Strategic information systems can be defined as the set of guidelines which performs the function of assisting the companies in setting their strategies and plans in accordance with the existing norms. The basic motive behind the incorporation of such systems is that it enables the entrepreneurs to effectively make the assessment of the environmental changes and utilize it for the benefit of the business (Coronel & Morris, 2016). The use of strategic information system makes decision making process much easier. The support systems assist in streamlining business objectives and aligning the information systems with the business strategies of the company.

This report is focused on Telstra Corporation Limited. The report makes the complete internal and external analysis of Telstra and then proposes an information system solution which can be utilized for gaining competitive advantage in the market.  

Telstra Corporation Limited is the largest telecommunication company of Australia which performs the function of building and operating telecommunication networks and market voice, internet access, mobile and various other products and services. In other words, Telstra offers a complete range of communication services and competes in all telecommunication markets. They build content and technology solutions that are easy to be used. Its operations are spread over 20 countries.

In Australia, Telstra provide 17.6 million retail mobile services, 3.5 million retail fixed broadband services, and 5.1 million retail fixed voice services (Telstra, 2018).

Telstra Corporation Limited belongs to the telecommunication industry. The telecommunication industry in involved in the transmission of signals, signs, information, images and sounds with the help of radio, wire, electromagnetic or optical systems.

Economic- Telstra is considered to be an economically sound organization, but the financial structure of this organization is still affected by the emergence of tax rates and inflation. Due to the increase in production costs, the service charges are also increasing. It may result in unwelcomed circumstances for the organization (Campbell, 2017).

Physical- along with fulfilling the requirements of their customers, it is also the responsibility of the businesses to take of their physical environment. The physical environment required the companies to behave responsible and take steps for reducing the impact of its activities on the environment. Telstra has adopted a sustainability strategy in order to deal with the environmental challenges (Klettner, Clarke & Boersma, 2014).  

Socio- cultural- mobile services and internet have become an important part of human life. However, telecommunication growth is still restricted to urban areas only.  Telecommunication industry is considered to be a reliable source for providing different services to the users. However, natives of rural areas are also expecting some assistance form such companies.  It is a key issue which is being experienced by Telstra every now and then.

General Environment Analysis

Global- there a few big companies in the telecommunication sector that operates globally. Therefore, there is wide scope for Telstra to operate its operations globally.

Technological- Internet and smartphones have created an important position in the lives of people. These days, internet is required by people for fulfilling all their requirements. Cars and Buses also have an established WI- FI connection. This has led to increased production cost for Telstra. This has created a challenge for the company (Grishunin & Suloeva, 2015).

Political/ Legal-A number of issues related to rules and regulations framed by government is faced by Telstra as it is the leading Australian telecommunication company. Government takes a number of steps in order to dominate the organization due to which a number of issues are faced by Telstra (Barry, 2018).

Demographic- 89 % of the population of Australia lives in urban areas. Australia is considered to be one of the most urbanized countries of the world which, in turn, has offered numerous opportunities to Telstra.

Bargaining Power of Buyers- Nowadays, the demands of buyers are increasing as they want to get the best offerings by paying the minimum possible prices. This pressurizes Telstra to fulfill their demands in order to maintain their position and profitability in the market. This has led to the increase in the bargaining power of the buyers and has also increased their ability to seek offers and discounts (Coussement,  Lessmann & Verstraeten, 2017).

Bargaining Power of Suppliers- most of the companies in the telecommunication sector purchase their raw materials from various suppliers. Therefore, the dominant position of the suppliers can result in decreasing the profit margins of Telstra in the market. The negotiating power is used by the powerful suppliers in the telecommunication sector for extracting higher prices. The high bargaining power of the suppliers have ultimately resulted in lowering the profitability of telecommunication services.

Industry Substitutes- the profitability of the industry suffers when a new product or service is capable of meeting the needs of the customer in various ways. In the telecommunication industry, the threat of substitutes is high as it offers value proposition which is entirely different from current industry offerings. There are a lot of new substitutes in the market due to which the profitability of Telstra is being affected (Singh, 2014).

Threat of New Entrants- Telstra is pressurized by the innovative services brought by the new market entrants. They offer new value propositions to the users, reduces costs and use lower pricing strategy. These challenges are required to be managed by Telstra along with building barriers so that its competitive edge can be safeguarded.

The Industry Environment

Rivalry among competitors- if there is intense rivalry among the existing players of the industry, then the prices are reduced and the overall profitability of the industry also falls. The operating environment of Telstra is very competitive which even impacts the long term profitability of the business (Bhatti, Abareshi & Pittayachawan, 2016).

Telstra faces major competition from Optus, TPG and Vodafone. Their strategies have resulted in a serious threat for Telstra. Optus, TPG and Vodafone are taking a number of steps from time to time in order to attract the customers of Telstra towards their network. These companies are offering discounts for the customers. Such discounts have even resulted in a fall in the earnings of Telstra. Customers are even paying premium prices to the incumbents in the telecommunication market of Australia. The decisions of the customers with regard to telecommunication services provide that the prices are required to be lowered for increasing the profitability in the market. In the Australian economy, the company will lowest cost and productive nature will lead towards productivity gains (Campbell, 2017).       

However, Telstra stands against the competition with the help of its operations and strengths. It has stronger network infrastructures with the help of which it is able to defeat other players in the market. Innovative practices have supported Telstra in dealing with the various challenges in the market.

Opportunities- the increase in the demand for telecom services appears to be a great opportunity for Telstra. The success of Telstra in telecommunication sector has provided it a differentiated image in the market which can be used for entering into new businesses in other sectors. Moreover, the technological development provides Telstra an opportunity to renew their focus on the services. Its brand reputation can also be utilized for the purpose of entering the international markets such as Asia- Pacific and China. The changed lifestyle of people requires them to have fastest network so that they can meet all their requirements on instant basis. Customers get attracted towards discounts and offers so Telstra should utilize its internal talent for building innovative strategies for attracting the customers (Bhatti, Abareshi & Pittayachawan, 2017).  

Threats- Rapid technological changes are taking place in the market due to the increased requirements of the customers. New entrants are coming up in the market with innovative technologies at reduced prices which poses a serious threat on the profitability of Telstra. Furthermore, the mobile market of Australia is also saturated. A lot of revenue was earned by Telstra from the mobile market, but it is expected that its operating performance will get influenced in the near future. Moreover, it is projected that that the operation performance of Telstra will also get affected by the regulatory environment. The stringent regulations of the government can also pose a serious threat for the organization (Gregory, 2016). Speedy network has now become the basic requirement of today’s generation. If the company lags behind in meeting the requirements of the customers, the customers will switch on to other network resulting in a heavy loss for the organization (Bhatti, Abareshi & Pittayachawan, 2016).

Competitive Environment

The main reason behind the success of Telstra is its tangible and intangible resources. The outstanding service provided by the organization to the customers in the form of  retail fixed voice services, retail mobile services and retail broadband services act as the greatest intangible resource for the company.

Furthermore, the company has strong network infrastructure for fulfilling the requirements of its customers at diverse places. The company is capable of building content and technology solutions that are easy to be used and therefore provides the fastest and the largest national mobile network. The employees are responsible for the success of the organization over 20 countries.  Telstra has employed over 32,000 employees as per the financial report of the year 2017. The efficient management and human resources along with wider range of services, and strong brand image are also the resources of Telstra.

The main capability of Telstra is its strong brand image with the help of which it is able to handle the challenges in the marketplace. This brand image can assist the company in expanding and diversifying its business all across the globe. The customer chooses this network over the competitors only because of this brand image which is established over a long period of time.

The workforce of Telstra is also its capability as without an effective workforce, an organization is unable to achieve its objectives/ aims. It has a perfect blend of diverse talent with the help of which it is capable of finding innovative ideas. The assistance of such employees helps Telstra in the effective implementation of the strategies in the organization (Yeboah- Asiamah, Nimako, Quaye & Buame, 2016).  

Telstra also have strong network infrastructure due to which it is able to lead the Australian market. Its networks are also strong which offer uninterrupted services to the customers. The network structure of the competitors in the market is not that strong which leads to several interruptions from time to time.

Competitive Advantage- The strong network infrastructure of Telstra has provided it a competitive advantage over the competitors. The competitors are unable to offer strong network connectivity to the customers due to which they are unable to lead the industry (King, 2018).

Branding and Market- Telstra has a strong brand image as the leading telecommunication company of Australia. This brand image provides success to its marketing activities as well. The number of customers keeps on increasing owing to the brand image of the company which has been created over a period of time.  

Opportunities and Threats

Innovation- The internal strategies and marketing strategies of Telstra are very innovative. This innovation and first mover advantage have resulted in increased profitability for Telstra. Innovative steps are also taken by the business with regard to the reduction of impact of its activities on the environment (Hahn, 2015).   

Integration- Various departments of Telstra are effectively integrated in a way such that it can obtain the required information at the time of need. This ease has led to simplicity of operations and has led towards the success of the organization.        

For the effective functioning of an organization, the security of its internal data and systems is of prime importance. Telstra should adopt an information system solution designed by experts with the help of which it can monitor the server systems 24/ 7 along with the effective monitoring network connectivity. This will allow Telstra to monitor the server performance on timely basis which will assist in maintaining the security and confidentiality of data. The tailor made information system solution will further ensure that the backups are taken by the company on regular basis so that the company remains safe from the loss of data in a disaster (Simkin, Norman & Rose, 2014). The physical security of the data will be data will be ensured through biometric fingerprint reader access. At the time of taking a network connection, all the important information regarding the customer is obtained. The confidentiality and security of such information ca also be maintained with the help of such system solutions (Kroenke & Boyle, 2015).

Another information system solution proposal comprise of a solution through which Telstra can be in touch with the different departments of the organization. The data required for the day to day working can be effectively completed when the workings of all the departments will be integrated (Goes, 2014).    

The evaluation of the proposed information system solution provides that the business requirements of Telstra can be effectively met after the adoption of these system solutions. The use of these system solutions is therefore recommended so that Telstra can appropriately maintain the security standards relating to information obtained from the customers. The internal working of the departments will also simplify when such system solution will offer all the required information in one go. This will also lead to brand reputation enhancement in the market (Chatterjee, Sarker & Valacich, 2015).        

Conclusion

Therefore, it can be concluded that strategic information systems are the set of guidelines which performs the function of assisting the companies in setting their strategies and plans in accordance with the existing norms. This report focuses on Telstra Corporation Limited by conducting complete internal and external analysis and then proposes an information system solution which can be utilized for gaining competitive advantage in the market. The analysis of the general environment of the company provides that the company is capable of dealing with the outside factors in an effective manner. However, the strategies of Optus, Vodafone and TPF create a threat for Telstra.    

The analysis of the internal environment of Telstra provides that its strong tangible and intangible resources have allowed it gain reputation in the market. Brand reputation, effective workforce and strong network infrastructure are the major capabilities of Telstra. At the end of this report, the proposal of information system solution has been made which is suitable for the business activities of Telstra. The adoption of such information system solution will assist Telstra in the maintenance of system security and will simply the operations of the business.

References

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https://www.smh.com.au/business/competition-heats-up-between-telstra-optus-vodafone-20150526-gh9n5s.html

https://www.zdnet.com/article/hutchison-sticking-by-vodafone-strategy-in-australia/