IT Assignment help online study guide Review Analysis:: Telstra Australian telephone
Question Asked??
Write an essay on Australian Telephone & telecommunication services??
Solution proposed::
Introduction:
Telstra is an Australian telephone and telecommunication services company. It was earlier owned by the Australian government, but in the latter part of the decade of 90s the government privatized it by floating its shares to the public and raising $ 14 billion in the process. Telstra has around 9.2 million fixed line customers, 9.7 million mobile service customers and 5.2 million mobile internet customers. The company uses vast network of old copper wires , that it inherited from state ownership days, to serve its customers.
The competitors of Telstra object to the way Telstra has been privatized. It now operates as a single company which owns both the network and the retail operations. For its network operation many of its competitors in the retail segment are its clients. Competitors like Optus allege that Telstra is blocking competitor’s access to the copper wire network. They allege that the existing arrangement gives Telstra discounted access to its copper network. Telstra is using this discounted access to block competition, its competitors allege.
In 2008 the Australian government invited tenders for a plan to upgrade Australia’s broad band capacity by laying down a network of optical fibers. Telstra didn’t bid because it wanted to protect its investment in Next G wireless. Telstra saw wireless technology as a more preferable alternative to the optical fiber one.
The Australian government went ahead with the bidding process without Telstra and announced a different and much larger $ 43 billion plan to take optical fiber into 90 per cent of Australian homes and premises.
2. Problem Identification
The problem is one of faulty planning. The management of Telstra failed to plan for the scenario after privatization. This failure in planning is now coming in the way of operations of Telstra.
The right planning would have clearly foreseen that monopoly objections would be raised if Telstra is privatized as a single company which owns and operates both the copper wire network and the retail business. Telstra should therefore have been privatized not as one but two separate companies. One of these companies would have operated the copper network while the other would have been in providing telecommunication services to retail customers.
The problem from this faulty planning doesn’t stop here. Telstra didn’t bid for Australian government’s optical fiber project because it already invested in the alternative Next G wireless technology. The optical fiber project will reach 90 percent of Australian homes and premises. The Next G wireless technology of Telstra may not compete with the optical fiber technology on such a wide scale. So Telstra decided to invest $ 200 million in upgrading its own coaxial cable network. However this will be financially viable if it can sell the usage of the upgraded coaxial network to its rivals also. But then again competitors will raise the issue of it having near monopoly power because it owns the network and also competes in the retail segment.
3. Critical Analysis
The four management functions are planning, organizing, leading and controlling. Out of these, planning is the most important one because if planning goes wrong everything else will go wrong (Coyne, K.P. and Sujit Balakrishnan ,1996). The same is happening in the case of Telstra.
1.What are the environmental factors that a telecommunications company entering the market needs to consider in its planning?
A telecommunications company like Telstra should do a detailed PESTLE analysis while planning. This involves analysis of Political factors, Economic Factors, Social factors, Technological Factors, Legal factors and Environmental factors. Such an analysis would have revealed to Telstra the requirements of the competition and anti-trust laws in Australia (Roy, Ananya, 2008).
Michael Porter’s industry analysis model should also be considered by telecommunication companies like Telstra while planning. This model analyzes an industry on the following parameters (Porter, M.E , 2008):
i) Bargaining power of customers.
ii) Bargaining power of sellers.
iii) .Intensity of competitive rivalry.
iv) Threat of substitutes.
v) Barriers to entry
If Porter’s five forces model was applied by the managers of Telstra while planning , they would have understood that if they charge higher prices from their competitors for using the copper network, their market share in the retail segment would increase to such an extent that it would give monopoly power to them. The competition regulator of Australia, the Australia Competition and Consumer Commission, in such a scenario is very likely to interfere and break Telstra into two smaller companies.
The managers would have broken Telstra into two separate companies at the time of privatization if they had conducted Porter’s five forces analysis. Such a thing would have also been more beneficial for the shareholders; it would have maximized their wealth.
2. As a Telstra manager what plans do I need to make in such a situation?
The right course of action in this situation is to rectify the mistake of the past. Telstra should be broken down into two separate companies: one for owning and operating the infrastructural network while the other for owning and managing the retail operations. Only such an action can ensure that the interests of the shareholders and other stakeholders of the company are protected.’
The planning will require that this de-merger of Telstra into two separate companies goes smoothly and without any operational disruptions or inconveniences for the employees and customers of Telstra.
3. How would I undertake planning process?
I would use scenario analysis in the planning process. If the management of Telstra had used scenario analysis in their planning process they would have identified future challenges and opportunities.
I would also have used contingency planning to plan for contingency scenarios. One such contingency situation in the case of Telstra is the government’s decision to focus on optical fiber technology rather than the Next G wireless technology in which Telstra has invested.
Benchmarking in planning process is important because it can assess the effectiveness of planning process by comparing actual performance against benchmarks set during the planning process (L. Fahey and V. K. Narayman ,1986).
4.Would there be value in using participatory planning in this situation
Yes, there is value in using participatory planning in this situation. There are 2.3 million shareholders of Telstra. Telstra should take the input of the shareholders and other stakeholders (employees, suppliers etc) while planning. Such a planning process is likely to succeed in taking care of the interests of the various stakeholders.
4. Recommendations
It is strongly recommended that Telstra is broken down into two companies – one for managing the network infrastructure while the other for carrying out the retail mobile service operations. The shares of the existing shareholders should be swapped for the shares of the newly formed companies.
It is also recommended that while carrying out the planning for this split of Telstra, the management should adopt a rigorous approach. Scenario analysis should be done to identify the likely scenarios that may emerge in future. The planning for the split of Telstra into two separate companies should lay down the way the management and employees will be split among the two companies. Any concerns of employees or other stakeholders regarding this split should be addressed. They should be explained why there is no other option but to de-merge the company into different companies.
In case the management opts for not going for the de-merger route then it should ensure that the discounted access to the copper network to Telstra is ceased. Telstra should pay the same price for using the network as the competitors. However the risk with pursuing this course of action is that in future concerns may be raised again by competitors that Telstra is using its ownership of copper network for blocking competition.
5. Conclusion
The case of Telstra shows how a mistake in planning can cause some very serious problems for the company in future. It is impairing the expansion plans of the company. It risks facing the ire of the competition regulator. Corporate structure and ownership is of critical importance in issues relating to anti-trust and monopoly. Competition regulators usually decide to order break-down of a company into smaller ones if they see that the structure of a company is one which blocks competition and promotes monopoly.
The management while planning should ensure that the present structure of a company doesn’t come in the way of competition. The attitude of competition regulators in developed companies is hostile to any attempt to create monopoly.
Planning is the most important of all managerial activities. It should be undertaken cautiously and with full rigor. Any lapse in the planning process can frustrate the future course of things. A management that fails at the planning stage usually fails in carrying out other managerial activities like organizing, leading and controlling.
NC49
If you want IT Management Assignment Help study samples to help you write professional custom essay’s and essay writing help.
Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.
To get more information, please contact us or visit www.myassignmenthelp.Com
