In this report, a comprehensive discussion-taking place of various strategies forms a very important element to the organization growth. It is also a plan of action developed to gain long-term goals of a business enterprise. For any organization, it is important to ensure that they are using adequate business strategy tools in alignment with the company mission and vision. For more explicit research, a company is selected i.e. Telstra Company, one of the Australia largest telecommunication company. This will help the users to gain deep and practical knowledge of all the strategy development tools.
PESTLE analysis is a strategic planning method that helps an organization in reducing threat by analysing various environmental factors (Srdjevic, Bajcetic and Srdjevic, 2012). It is one of the cost effective tool, which helps the business to get a deeper understanding of business, addressing threats and techniques to exploit opportunities.
For instance, an analysis is made on Telstra Corporation below –
- Political factors – Promoting of regulatory reforms by the government.
- Economic factors – Cowed GDP due to dropping in product prices in New Zealand and Australia.
- Social factors – Increasing expatriate population to stimulate telecom service growth (Wright, Clibborn, Piper and Cini, 2016).
- Technological factors - For increasing customer experience and service offerings, investment in digitization. In addition. Leasing of telecom infrastructure and network.
- Legal factors – ACCC policies in relation to regulatory changes.
- Environmental factors – Foray into environment friendly battery storage segment.
This is also a strategically planning tool to assess the company competitive position by recognising its strengths, weakness, opportunities and threats. It helps the organization to identify its potential in the dynamic business situation (Helms and Nixon, 2010). This will helps the business enterprise in making several business plans and policies with future perspectives. For instance, Swot analysis of Telstra Company is stated below,
· Telstra has a dominant market position in Australia.
· They also have cordial relations with regulatory bodies.
· Have huge budget to invest and adopt latest technologies.
· Their prices if very high than the competitors.
· Latency issues in comparison with Vodafone and Optus (Smith, 2018).
· Expansion or joint venture in other global markets like China and Asia-Pacific.
· Improving area in service offerings.
· The mobile market in Australia is saturated.
· Change in rapid technology.
Every organization has these four aspects in their business environment, which help them in making business plan and objectives strategically.
Porter Five Forces
Five Force model is derived from industrial organization economics to analyse the competitive intensity and attractiveness of an industry in respect with profitability (Stonehouse and Snowdon, 2007). The originator of this model is Michael E. Porter. Various strategy consultants use five forces framework for measuring business strategic position in the industry. It helps the business to make strategic plans in relating to the firm's profitability.
- Threats of new entrants– In telecommunication services, new entrants bring innovation with having strategy like lower pricing, cost reduction, and delivering value proposition to the customers. Telstra is dealing with this aspect by introducing innovative products and services, building economies of scale, doing investment in research and development.
- Bargaining power of suppliers - In telecommunication services, suppliers stand on a dominant position decreasing the margins of the company. However, Telstra is trying to make this situation in control by developing effective supply chain with the help of different suppliers, and experimenting with product design having different materials as this will help them to shift to other suppliers when price goes up for one raw material.
- Bargaining power of buyers – The demand of buyers will always be rise as the telecommunication market in Australia is saturated. This will affect the market competiveness in long run. As customer will be having a higher bargaining power, they will easily able to pursue increasing discounts and offers. Telstra Corporation is trying to develop large customer base so to reduce bargaining power of buyers and make their operations, production and sales process in a streamline way. Moreover, Telstra also tries to innovate new products so as to diminish defection of existing customers (Abraham, 2014).
- Threat of substitute products or services– Meeting of products or services with similar customer needs in several ways will have a significant impact on the industry profit. For instance, Google drive and Mega drive are both substitutes for storage hardware drives (Drake, 2018). Telstra is tackling this risk by being service oriented rather than product oriented. The company is also trying to acknowledging the central needs of the consumers rather than analysing what they purchasing.
- Rivalry among the existing competitors – The overall profitability of a firm will decrease when there is rivalry among the existing players in industry. The telecommunication market in Australia is very competitive and this is having a significant effect on overall profitability of the firm (Strong, 2018). This makes Telstra build sustainable differentiation in the market and also do collaboration with the competitors to raise the market size.
With analysing all these five competitive forces, Telstra Corporation Limited., can identify game-changing trends early and thus exploit the emerging opportunity.
Ansoff Matrix is a strategy development tool helps business firm in portraying alternative growth strategies. This concept is first presented by Igor Ansoff focusing on corporate present and potential products or market (Jarratt and Stiles, 2010). This approach includes four possible combinations and in case of Telstra, this matrix will be applied like in following way -
- Market penetration– It means selling more products to existing customers. To increase sales, heavy promotion can be done in align with aggressive promotion. For instance, to increase market penetration, Telstra has undergone various important shifts in customer service strategy with penetration of digital mediums. This will help them in the competition with Optus and Vodafone.
- Product development – It is defined as developing products for customers that are loyal towards the brand. For example, Telstra soon to come up with a new product line for the customers in respect with the interne of things (IoT). This will come up with rolling of 5gG services in the upcoming services. This will bring customer a new user experience towards the use of services.
- Market development– Bringing the existing products or services to a unified new market will be termed as market development. Therefore, this strategy will be termed as targeting new division, region, segments or country for the respective product. Telstra is planning to come up with their business in Asia pacific, as the Asian population will be proved as various business opportunities in relation to Australian manufacturing. This will require resource efficient manufacturing, business model innovation, and industry collaboration.
- Diversification – It refers to introducing a fresh product in a whole new marketplace. This strategy comprises lot of cost and risk and if the business is aware of the future consequences, then the end reward are worth is. In previous years, Telstra failed to plug earning due to unsuccessful investment in various start-ups since 2013 (Reuters, 2016).
Considering all, strategy development tools are very important for the achievement of organization goals and objectives. This tool helps the business firm in acknowledging the business environment, which is full of threat and potential opportunity. In most of the cases, Telstra is using these tools in an effective way; however, it needed to do business outside the home country to achieve economy of scale. This will help the company in market development and reduces threats to a certain extent.
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