Business Strategy Report PDF

Preview

Summary

Business strategy report for Spark Communications Australia...

Description

Running head: BUSINESS STRATEGY REPORT

1

Business Strategy Report Executive Summary As a growing organization that leads New Zealand’s telecommunications industry, Spark has realized a strong performance in key growth areas especially in mobile, cloud, security and service management. The organization has seen substantial progress in digitalization and continues to focus on customer satisfaction and the lowering of costs to serve. However, Spark still needs to improve on various areas in order to accelerate its business performance leading to better outcomes for the company. Recent financial results reveal that the company is continuing to deliver its key financial and operational targets. Recent results show a revenue growth of $35million and this has totaled $132 million across mobile, cloud, security and service management areas. The report provides an analysis and evaluation of the current profitability and prospects as well as financial stability and market trends of Spark Limited New Zealand. Recent competition from organizations such as Two Degrees has limited the expansion of this organization and there is a need to develop strategies for dealing with the growing competition. The methods of analysis used include strategy canvas and four-action framework. The strategy canvas shows areas of improvement that need to be considered and the four-action framework directs how these improvements can be made. The report reveals the prospect of the company in its current position and the recommendations needed to be able to ward off market competition. Through this report one also gains understanding of the major competitor, Two Degrees as well as how to improve performance against this organization. Spark needs to focus on new areas of strategic management in order to realize its objectives. This report gives an insight concerning the various areas of concern that Spark will have to focus on going forward. The paper explores market strategies that Spark can implement as well as the practical solutions that can help to deal with the various shortcomings as well as a market plan for implementation.

Critical Success Factors of Spark The New Zealand telecommunication sectors have advanced tremendously over the last few decades and are one of the world's rising mobile and internet communication networks today. Leading companies such as Spark and 2degrees have managed to expand with strong technical capabilities and price advantage, and these have quickly dominated the market of telecommunications products and services. There are various critical success factors that Spark has managed to capitalize on in order to dominate the industry. 1.

Market Position

Market position is one crucial factor that has helped Spark to continue dominating the industry. It can be reflected by the company’s business size as well as market share in the business segment. The organization has a large number of subscribers, and the number of traffic and connection times reflects the organization's market domination. The company has a significant business size, and market share tends to have a stronger resistance against any unfavorable business environment. The company also has a better bargaining position to negotiate with vendors as well as regulators (Locke & Cave, 2018). Spark has also managed to maintain flexibility to adjust selling prices due to its substantial brand equity. The organization also shows the ability to enlarge the customer base in line with the capacity to enhance the network coverage and even though this has required a sizeable investment cost. The market position of the organization has been dependent on the financial capacity to support capital expenditures. 2.

Operating Management

Spark Limited has managed to continually maintain management quality by evaluating business strategy in order to anticipate the rapid growth of technology as well as global trends. Furthermore, the company has adjusted to global trends and changes in regulations, and it has maintained the ability to generate efficient business activities. The company has continuously seen growth in profitability margins (from each of its profitability segments and from each business segment), the revenue (revenue per user as well as revenue per employee) and the tariffs settings for services offered (Locke & Cave, 2018). Spark has maintained a clear vision and business strategy that has enabled the company to adapt to the business environment allowing the company to receive much enthusiasm from the market. Spark continuously releases new and innovative products, and the company has been able to take advantage of the market opportunity that has led the company to a stronger market position.

2 BUSINESS STRATEGY REPORT

3.

Diversification

Spark has also managed to diversify its revenue generation, and this is based on the types of businesses or the services provided, as well as the market segment. The company has also shown the capability to create product differentiation as well as disperse revenue from various market segments and geographical areas within New Zealand (Dagli & Jenkins, 2016). Through this, the company has been able to maintain an income stream of revenue, and this has favored the organization. 4.

Quality of Services

Spark Ltd has been able to provide quality services to the customer base, and this has helped to extend its popularity to its customer base (Dagli & Jenkins, 2016). The organization has improved on the use of technology, and by doing this, it has ensured customer engagement. Spark Limited continues to expand its customer base through the provision of quality services, and this has seen the organization improve on its business productivity.

Analysis of 2degrees Two degrees is New Zealand’s newest telecommunication organization, and it began operations in 2009. The company acquired New Zealand fourth largest ISP in 2015 and now delivers broadband and mobile internet throughout the country. The organizations have seen ups and downs since its inception in New Zealand, but it has been reinforced by a recent increase in subscriber base as well as improvement of broadband, video and telephone services (Junior & Montero, 2017). Two Degrees is visibly trying to catch up on the market, and it has implemented modernistic strategies to ensure the achievement of this. The company operates through four business segments. One of these is the use of business solutions, and this ensures the provision of communication services to business class customers and individuals who can subscribe to the wireless services using various subscriber plans. It also offers entertainment services targeting the youth, and this includes the use of video as well as the internet, telephony, and interactive services to consumers. Two degrees also focus on the consumer base by offering wireless services to consumers and wholesale subscribers. Two Degrees of benefits from the use of various tangible assets such as licenses, wireless licenses, as well as customer lists (Junior & Montero, 2017). The company has also recently benefitted from the use of R and D facilities, and this includes the use of technology outreach programs aimed at providing venture capital-funded startups. It introduces new solutions as well as products and applications that are developed by third parties. Two Degrees Company has also managed to implement the use of various corporate responsibility initiatives in order to build its brand value in New Zealand. The company openly participates in improving the lives of locals through the support of local communities in different ways. The organization has an organized advertising campaign, and it implements the use of various go to market strategies for its products. There is an increased level of customer satisfaction, and it is clear that Two Degrees is dedicated to achieving the highest levels of customer satisfaction. Furthermore, the organization has been able to improve its performance in new markets, and this has helped the company to expand into new areas in New Zealand. Using various expansion strategies, the company has been able to build new revenue streams and diversify its income. Two Degrees has perfected its employment strategies, and it has a highly skilled workforce and offers training and learning programs to its staff (Haryadi & Riani, 2018). The company invests enormous resources into the training and development of employees, and this has helped the organization in its expansion campaign, making it a potent threat for Spark. The company has furthermore created a trusted base of distributors and dealers, and this has helped to promote company products, and at the same time, it has invested heavily in its sales and marketing team to ensure effective use of marketing strategies. However, Two Degrees has failed to implement the use of product demand forecasting, and this means that it has missed on many opportunities that Spark capitalizes on. It is also essential to consider that though Two Degrees invests in employee training, it spends too much money on training its employees for the market, and this hinders the achievement of profitability (Haryadi & Riani, 2018). Another major factor is that the company has failed to invest in research and development practices as compared to Spark, which is mostly ahead in this area. Two Degrees has many gaps in its product range and has less diversity of products as compared to Spark and other competitors. Though Two Degrees is steadily increasing its space, in the industry, it still faces intense competition, and this has hindered successful growth of this organization within the sector.

3 BUSINESS STRATEGY REPORT

Analysis of Spark

It is important to analyze the performance of Spark using the porter’s five forces model: 1. Intensity of competition among the rivals. Spark has strong rivals in New Zealand such as Vodafone and Two Degrees and the competing organizations are slowly increasing in numbers. All of these companies provide similar services with the same capabilities. Though Spark has enhanced its investment in the last few years, it continues to work hard to expand its network yet the presence of competitors provides a major threat to the organization. 2. Bargaining power of buyers. Although the subscription base is not concentrated, they are looking for options in the market offering better quality, coverage as well as rates. Spark maintains a market lead due to the large number of subscribers that it has and this means that the subscriber position is strong. However, in terms of net additions in the past quarter, Two Degrees realized the highest number with over 3.66 million subscribers. 3. Threats from Substitutes The presence and the easy availability of substitute products is a major threat for the survival of this company and this can lead to the company to cut product prices in half. The growth rate of reliance is more than any other organization. 4. Potential entry of new competitors. Current technologies in the telecommunications industry require heavy capital investment for success and this means that new competitors have limited chances of penetrating this market. However, Two degrees is rapidly growing and this is something to consider. 5. Bargaining Power of Suppliers

4 BUSINESS STRATEGY REPORT As far as suppliers are concerned the pros and the cons to all service providers is equal than that of human resources or products.

Strengths 1.

Customer Relationship

Spark has managed to integrate the use of Customer relationship management to help improve relations between the customer and the management of the organization for better outcomes. Spark implements the use of an integrated data approach, and this included offering new solutions for marketers to collaborate and analyze data for every channel to ensure the use of independent solutions for customer care. The use of these tools has ensured the creation of multiple streams to offer audience information for better outcomes. Spark uses interoperable solutions that integrate a range of consumer data from various sources, and this creates a centralized view for the customer. The company has also adjusted campaign messaging and targeting to align with functions in meeting audience needs as well as promoting their interests and preferences. Spark also implements the use of unified data for holistic execution, and this allows data integration and seamless workflow across various channels. The company integrates holistic and integrated execution and seamless workflow across multiple channels and engages consumers wherever they are. Spark uses an identity management system that resolves to the individual level, and it delivers integrated workflows and reporting across all channels to ensure adequate consumer outcomes. Spark also incorporates machine learning and predictive analytics, and this ensures identifying strong performance, areas of improvement, and the patterns of user behavior. Through this, the company can build a proper view of every consumer, and this ensures the prediction of consumer likes and preferences. It ensures that marketers can run personalized campaigns capable of reaching consumers at the required time for better outcomes. Spark implements the use of a channel platform, and this enables machine-based learning allowing marketers to work more intelligently in line with the company's business goal (Haryadi & Riani, 2018). The company also implements cross channel attributing, and this ensures effective solutions to customer problems for better outcomes. The company orients itself around the customer, and this is the basis of success in customer care, therefore, ensuring viability in the New Zealand market. Smart also implements the use of case management and tracking in customer care, and this makes it easier to handle customer cases and ensure that all user situations are channeled to the right channels for practical solution finding. It ensures the creation of cases and quick response when customers send emails and interact on live chat. 2.

Cost Management

Spark has also implemented various cost management strategies to ensure effective streamlining of operational costs. It has integrated the use of telematics solutions to ensure optimization of fleet operations for increased productivity as well as efficiency. The company has also managed to reduce unexpected maintenance costs, and this is through getting rid of unreliable equipment which main makes the organization more unreliable to the current customer base (Lemstra & Melody, 2015). Through this, it has been able to mitigate the risks of breakdowns and make products safer. Spark sets scheduled maintenance for its equipment, and this has helped reduce downtime and slowdowns in productivity. The organization also schedules maintenance and minimizes the impact of productivity. Spark effectively monitors daily operations, and this includes tracking driver behavior and habits. It also uses timesheets to ensure reliable justification of worker time in business operations. It uses a database record to ensure that all worker times add up on records. The company also enables field employers to invoice customers and receive payments directly on-site to help minimize the occurrence of unpaid invoices.

Weaknesses Spark has low diversification, and because it represents one of the most significant revenue streams, this means that risk exposure to the wireless telecommunications network is high. Competition in the telecommunication sector in New Zealand has grown, and this has led to a need for better strategies for diversification to help improve business prospects. Spark has also failed to improve and expand on its infrastructure, and this has stunted growth for the organization. High costs of infrastructure mean that the organization has to spend more on diversification as well as maintenance (Iqbal, 2015). The company finds it challenging to offer low prices to offer against competitors such as Two degrees, which is gradually increasing. Spark has also seen a decline in the use of landlines, which has in the past been a significant source of income

5 BUSINESS STRATEGY REPORT for the company. Spark has also been faced by limited market share as well as low margins due to high competition in the telecommunication sector, and this has affected its performance. Another major issue affecting Spark is the lack of flexibility of offerings, which has mostly affected the profitability of the organization.

Recommendations The organization will have to diversify its business operations, and this can only be done by acquiring firms in related industries. Through this, the company can help spread risk and reduce dependence on the telecommunications sector. Spark should also aim higher and expand regionally and globally. If the organization embraces larger goals, it will be able to achieve better outcomes. Spark needs to capitalize on the substantial brand image that it has built and the increasing use of wireless telecommunication (Hukill, 2018). The company can also strengthen its competitive advantage by maximizing the quality of services and investing in the use of high-quality marketing strategies in order to tap into the increasing customer base. Spark is the market leader in technology, and it has to develop ways of service improvement. The customer service department needs to use a more open approach and learn how to be friendlier to the customer base.

6 BUSINESS STRATEGY REPORT Telecom Strategy Canvas 10 8 6

Scoring

4 2 0

C

us

to

m

er

R

a el

n tio

sh

ip

C

o

M st

an

a

m ge

en

t

n In

ov

a

en tiv

es

s

nu

e

M

an

a

m ge

en

t

en

t

Sparks Two Degrees

Factors of Competition

Spark Current Value Curve

10 8 6 Scoring

4 2 0

C

t us

om

R er

a el

n tio

sh

ip

C

os

tM

an

a

m ge

en

t

I

o nn

va

en tiv

es

s

R

e ev

nu

e

M

an

a

m ge

Factors of Competition

The strategy canvas outlined above reveals how the company created a blue ocean strategy. It furthermore plots how the current competitor, Two Degrees, competes in the market space. It also focusses on what factors it competes on as well as how the competition scores on each key factors. One major aspect revealed is the various areas of business that meet and do not meet the current market desires. It gives a comparison of the customer relationship, cost management, innovativeness as well as revenue management across all markets. One can see the features that the market assumes will be part of the product or service that need to be eliminated. The graph also reveals which areas of business that Spark needs to raise in order to effectively compete with Two Degrees. A comparison of these two organizations shows that Spark needs to learn how to make use of alternative industries. Through this graph, Spark will also learn how to look across strategic groups within the industries as well as the chain of buyers. It also reveals the importance of setting up complementary product and service offerings. The graph also suggests a need to focus on either the emotional or

7 BUSINESS STRATEGY REPORT the functional appeal of the buyers. ...