Telstra case study latest 2021 PDF

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TELSTRA UNDERGOESMAJOR RESTRUCTURE Thi sdocumenti sai medathel pi ngt e ac her sands t udent ss t udyacont e mpor ar ybusi nes s e xampl ef orUni t4.Whi l ee v er yeffor thasbe enmadet oe ns ur et hi si nf or mat i oni sc or r ec t ,i t cannotbeguar ant ee d.Muc hoft hei nf or mat i onher ei sbasedont heopi ni onsandvi ewsof c omment at or sandequi t yanal ys t s,soi snotnec essar i l yf ac t .

I nt r oduct i on:TheChange OnWe dne sdayJune202018,Te l s t r aannouncedi twoul di mpl e me ntanew s t r at egyt hatwi l l r adi c al l ys i mpl i f yi t spr oduc toffer i ngsandc utupt o$2. 5bi l l i oni ncos t sbyt hee ndoft he2022 financi aly ear . Thes t r at e gy ,namedTe l s t r a2022,i sbase doni mpr ovi ngcus t omere xper i ence ,s i mpl i f yi ngt he busi nes ss t r uc t ur eandc ut t i ngcos t s.Someoft hemai nf e at ur e soft heannounc eds t r at e gy i nc l ude: 1. 8, 000r e duc t i onsi ne mpl oy eesandc ont r ac t or s( manyi nmi ddl emanageme nt ) 2. Ther es t r uct ur ewi l lr es ul ti nar educt i onof24l ayer sofmanagement 3. Radi calt r ans f or mat i onoft hec ur r e ntpl ansandpr i ci ngt ode l i v eri mpr ov edcus t omer s er vi c e 4. Af ocusont henew 5G ne t wor kandbei ngal eaderi n5G byi nv es t i nghe avi l yi nt he ne t wor kandpl anni nganear l yr ol l out .

CEO,Andr e w Pe nns ai dt he ywer ecr e at i nganew Te l s t r a.I nas har emar ke tnot e ,MrPe nnsai d, “ I nt hef ut ur e,ourwor kf or c ewi l lbeasmal l e r ,knowl edgebase donewi t has t r uc t ur eandwayof wor ki ngt hati sagi l eenought odealwi t hr api dc hange. ”

KeyPer f or manceI ndi cat or s Not e:( Att het i meofwr i t i ng,t heannualr epor tf or2017/18i syett ober e l eased.Be l ow ar esomeof t hekeyi ndi c at or sbe f or et he2017/18announc e ment ) Someoft heke yper f or mancei ndi cat or st hathav er e sul t e di nt heabov ec hangesi nc l ude: Per cent ageofmar ketshar e:Te l s t r a’ smar ke tshar ei nt hemobi l emar ke ti sdownar ound37% ( Endof2017)whi c hi sdownf r om appr oxi mat e l y42% i nJune2016.Howe v er ,t hei rgr i pont he NBN mar ke tr e mai nss t r ongwi t hanes t i mat e d49% shar eoft heNBN mar ke t . Numberofsal es/r evenue:Te l s t r ar e ce nt l yannounc edt he yar edowngr adi ngt hei rexpec t at i ons . Theyexpec tr e v e nuest of al lwi t hi nt her angeoft hei rpr e vi ouses t i mat e s,howev eri twi l ll i ke l ybe ont hel owe re ndoft her ange .I nanycase ,r e v enuesar ef al l i ng. NetPr ofit s :Ne tpr ofit sar ef or ecas tt obedownappr oxi mat e l y40% s i nc e2016. Cus t omercompl ai nt s:Ac cor di ngt ot heannualr epor toft heTe l ec ommuni cat i onsI ndus t r y Ombudsman( TI O) ,Te l s t r ahadani ncr e aseof43. 5% i nc us t omerc ompl ai nt smadeaboutt he m t ot heOmbuds mani nt he2016/17financi aly ear .Al lser vi c es( Mobi l e ,l andl i ne,I nt er ne t )hada s i gni ficanti nc r e asef r om t hepr evi ousyear .

Dri vi ngForces Compet i t i on Te l s t r ahasbee nt hemos tdomi nantt e l ec ommuni cat i onsc ompanyf oral ongpe r i odoft i me . Muc hoft hi sdomi nanc ehasbeenbe causeofi tsuper i ormobi l ene t wor kwhi c hhasal l owedi tt o i ncr eas ei t smar gi nsbyc har gi ngapr e mi um pr i cef ormanyofi t sser vi c es . Howev e r ,i ncr easedcompe t i t i oni nr e c enty ear shasmadei ti ncr e as i ngl ydi fficul tt oc ompe t e . Whi l eOpt usandVodaf onehav ebeeni nAus t r al i af orsomet i me ,i thasbeent hei nv e st mentof t hesec ompani esi nt hei rownne t wor kt hati spl ac i ngcompe t i t i onpr e ss ur eonTe l s t r at okeep t he i rcus t omer s . Thei mpr ov edne t wor ksofOpt usandVodaf onei ncapi t alci t i esandi nc r e asi ngl ymor er ur alar e as hasal l owedt hes ecompani e st oat t r ac tnew cus t omer s . Thei nt r oduc t i onofTPG TPG i soneoft hel ar g es ti nt er ne ts er vi c e i nAus t r al i a( e spe ci al l yaf t eri t sacqui si t i on Sept e mber2015) ,whi c hhaspr ovi de d c ompe t i t i oni nt hi smar ke t .Howe v e r ,i t announc ementt hati twi l lbui l di t sown ne t wor kwhi c hwi l li ncr e as epr e ssur eon

pr ovi der s ofi i Ne ti n c ons t ant wasTPG’ s mobi l e Te l s t r a.

Cur r e nt l yt her ear et hr e ekeymobi l e Aus t r al i a:Te l s t r a,Opt usand

ne t wor ksi n

Vodaf one . The i nt r oduc t i on of a f our t h Source: tpg.com.au ne t wor kwi l lonl yi nc r eas e c ompe t i t i oni nt hemobi l es pac e . TPG announc edi nMayt hatt he ywi l loffermobi l epl ansf r e ef ort hefir s t6mont hswhi c h i nc l udesunl i mi t eddat a.Cus t ome r st hatcont i nuewi t ht he i rpl anwi l lpayamont hl yc har geof $9. 99. Thi spr i ci ngst r uct ur ewi l lpl ac esi gni ficantpr e ssur eonTe l s t r a’ smar gi nswhi c hcur r e nt l ys t and atappr oxi mat el y40perc ent .Ac cor di ngt oCi t iRese ar c h,mobi l ehasbeent hel ar ges tc ont r i but or t oTe l s t r a’ sear ni ngsgr owt hov e rt hepastsev eny ear s .Thei nc r e asedc ompe t i t i oni nmobi l ei s l i ke l yake ydr i v e rt ot heannounc edc hanges . Whi l et hene w pl ansandpr i c i ngs t r uc t ur e( out l i nei npoi nt3i nt hei nt r oduc t i onabov e )ar ey e t t obede t er mi ned,manyf or e cas t e r sandc omment at or sar ee xpec t i ngTe l s t r at or e duc et hei rpr ofit mar gi nsi nt hemobi l es pac et omai nt ai nore v eni ncr eas emar ke tshar ebybei nghi ghl y c ompe t i t i v eonpr i c e .Mai nt ai ni ngt hi smar ke ts har ewi l lal l ow t hem t os cal et hebusi ne ss, e s peci al l ywheni tc omest ot her ol l outoft hei r5G ne t wor k. Thecompet i t i on cont i nues… Thei nt r oduc t i onoft heNBN hasc r eat ede v enmor ecompe t i t i onf ort het e l ec ommuni cat i ons c ompany . I nMay2018,Te l s t r awar nedt hemar ke tt hati t sear ni ngswe r eexpec t edt obeatt hebot t om end oft hei rpr e vi ousl yannounc edexpe ct at i onsast hei mpac toft heNBN c ont i nues . Theexpans i onoft heNBN i sc r e at i ngahol ei nTe l s t r a’ sr e v enuebecaus ec us t omer sar ebei ng f or c edt omov eont oNBN Co. ’ sne t wor k.Te l s t r a,al ongwi t hmor et han170ot herr ese l l e r soft he

‘ fixe d’ne t wor k,mus tt henc ompe t et oat t r ac tc ust omer s .Howe v er ,mar gi nsar eag ai nbei ng s que ez edbecauseoft hehi ghwhol esal epr i cet he ser e s e l l e r sne edt opayf orNBN Co. ’ sse r vi ce . I n2014,Te l s t r as t r uc kade alwi t hNBN Cot ohe l pc ompens at et hel oss esi texpe c t e dt or e cei v e duet ocus t omer sbei ngf or c e dt oadoptt henew fibr ene t wor k.Howe v er ,t he sepayment swi l lsoon s t opwhi c hwi l lpl ac eahol ei nTe l s t r a’ se ar ni ngs .

Pur s ui tofPr ofit s Thei ncr e ase dc ompe t i t i onabov ehasl edt os omepoor ert hanexpe c t edfinanci alper f or mance ov err e c enty ear s .Mor er ece nt l y ,e ar ni nggr owt hbe i ng12% i nt hefir s thal fof2018,andmany f or e cas tt hi st or e ducef ur t heri nt hese condhal fof2018. Theshar epr i c eoft hec ompanyhasf al l e ndr amat i cal l yov ert hepas t2ye ar s .TheASX 200 hasr i sens t r ongl yi nt hepas tt wo y ear s , whi l eTe l s t r a’ spr i c ehasr e t ur ned a neg at i v er e t ur nc l os et o50% i n t hes ame pe r i od.Whi l es har epr i c ei snota di r e c t r eflec t i onofpr ofit s ,i tdoe sshow awe aker pe r f or manc ef r om Aus t r al i a’ s l ar ges t t e l ec ommuni cat i onsc ompany . Al loft hec hangesment i one di n t he i nt r oduct i onar eai me dt o i mpr ov e pr ofit sandi ncr eas et her e t ur n f or s har e hol der si nt hel ongt er m. Thene w pl ansandpr i ci ngs t r uc t ur ear e ai medat be nefit t i ngc us t ome r swhi c hmayat t r ac tmor ecus t omer st ot heTe l s t r ane t wor kandr e sul ti n hi ghers al e sandpr ofit s.

Reduct i onofcos t s Te l s t r ai sl ooki ngt oi mpr ov epr oduc t i vi t ysi gni ficant l ybyr es t r uc t ur i ngandr e duci ngc os t si nt he busi nes s.Ther es t r uc t ur ewi l lr esul ti nal ossof8000j obswhi c hwi l lr educec ost ssi gni ficant l y . Te l s t r ae xpec t st hatsavi ngsofupt o$2. 5bi l l i onshoul dbesav e dasar e s ul toft hec hangesby 2022.

Res t r ai ni ngf or ces Te l s t r a’ snew s t r at e gyi sy e tt obeexec ut ed,maki ngi tdi fficul tt ode t er mi net hef or c est hatar e wor ki ngagai ns tt hec hange s,howe v ert her ei svar yi ngvi ewsaboutt hepot ent i alsucc es soft he new di r e c t i on.Somec onc er nsaboutt hesucc essoft hec hangei nc l ude:

Compet i t i on Oneoft hei ssuesf orTe l s t r aandot herNBN r ese l l e r si st hesi gni ficant l yhi ghwhol es al epr i c eof t heNBN.Thi shasmadei tdi ffic ul tf orTe l s t r at omai nt ai npr ofitmar gi ns . Howev e r ,manywi t hi nt hei ndus t r ye xpec tt hewhol e sal ecos toft heNBN wi l lc omedownats ome poi nti nt hef ut ur e .Somef or ecas t er sar epos i t i v er e g ar di ngt hi sandbe l i ev ei twi l lal l ow Te l s t r at o i mpr ov et he i rpr ofitmar gi ns( ac t i ngasadr i vi ngf or c e ) ,whi l eot her sbe l i ev ei twi l lac tasa r es t r ai ni ngf or c ebys i mpl yi nc r easi ngt heamountofpr i c ecompe t i t i oni nt hemar ke t .I ft hi si st o e v ent uat e ,i twoul dag ai npl ac epr e ssur esonTe l s t r a’ spr ofitmar gi ns .

Fi nanci alconsi der at i ons Thecos tofi nt r oduc i ngt henew c hangeswi l lbes i gni ficant .I nTe l s t r a’ sannounc ementt hey s t at e dt hatt hec os toft her es t r uc t ur eal onewi l lbeappr oxi mat e l y$600mi l l i oni n2019.The r e wi l lal s obef ur t herc os t si nt her e mai ni ngy ear supt o2022.

Empl oyees Duet ot hemassr edundanc i e s,e mpl oy ee sandt heuni ons ar el i ke l yt owor kagai ns tt hec hange s.Anumberof uni onshav eal r e adyr e spondedt ot heannounc eme nt i nc l udi ngt heACTU andCEPU.ACTU sec r e t ar ySal l y McManuswasquot edonsbs. c om. auass ayi ng“ The y [ Te l s t r a]hav ec hosent omake8, 000peopl ej obl ess ,t he y hav edes t abi l i se dane nt i r ewor kf or ce ,t he yhav ec hos ent o de l i v e rpoor e rse r vi c et ot hei rc us t omer s–t he yhav e c hosent oputpr ofit saheadofpe opl e ,j obsandse r vi ce . ” Theyar efight i ngt oc hanget hemi ndsofmanagement

Management Manageme ntwi l lpl ayavi t alr ol ei nt heexecut i onoft henew s t r at e gi cdi r e c t i on. Vi e wsr e gar di ngt hes t r at egyv ar yc onsi der abl y ,howev ermos tf or e cas t er s( i nc l udi ngUBSGl obal Rese ar c h)agr eet hatt hee xe c ut i onoft hes t r at egywi l lpl ayani mpor t antr ol ei nt het ur nar ound ofTe l s t r a.Somehav eexpr e sse dc onc er nsaboutt heabi l i t yofTe l s t r at obeabl et oe xe c ut et he t r ans f or mat i onalc hangesi naneffec t i v emanne r . Lowe randmi ddl emanagementwi l ll i ke l yal s oac tasar e s t r ai ni ngf or ce .Theannounceme nt s t at e st hatt her es t r uc t ur ewi l lr e s ul ti n24l essl ev e l sofmanagement .I ti sf or es eeabl et hat t hesel ev e l sofmanagementwi l lwor kagai ns tt hechanges .

Telstra Announces Telstra 2022 as their new long-term strategy Unit 4, area of Study 2 Structured Questions

Total marks 50

a. What is the name of Telstra’s restructure? Telstra 2022 1 mark b. Outline the four characteristics of Telstra’s restructure

1 mark

i. 8000 reductions in employees and contractors ii. reduction of 2 to 4 layers of management iii. focus on the new 5G network iv. Radical change to prices and plans to deliver better customer service.

c. Outline the purpose of Telstra’s restructure.

2 mark

1 mark – you could expand on this answer for two marks The Purpose of Telstra’s restructure was to improve customer experience and cut costs. 1.

Explain why leadership will be important for Telstra as it implements its restructure (2 marks)

Leadership will be important for Telstra as it implements its restructure as they have the ability to positively influence and motivate employees toward the achievement of business objectives. Since the restructure at Telstra can cause significant confusion or fear for employees at Telstra. This will important for leadership as they need to address any concerns that stakeholders have about the change. Thus will increase the likelihood of success for the change in the long term because key stakeholders are more likely to accept the change rather than resist the change. You could mention communication, support and motivation

2.

Explain why it’s important for a business to review its key performance indicators as it implements change. Explain in relation to a contemporary business you have studied this year. (2 marks)

It is important for Telstra to review its KPIs as they implement change as KPI are a specific set of criteria used to measure the efficiency and effectiveness of Tetras performance. Since one of the main focus of Telstra is to improve customer service it can use the KPI of the number of customer complaints which According to the annual report of the Telecommunications Industry Ombudsman Telstra had an increase of 43.5% in customer complaints made about them to the Ombudsman in the 2016/17 financial year. By using this data Telstra can evaluate their performance to determine if the changes made during the restructuring have been successful, In this case there has been a increase so the business will need to use a management strategy of staff training which can increase the likelihood of the business achieving its set goals of the restructure. They are making the changes as a result of this data not before the data. Make sure you are completely clear on the facts in the case. Therefore they would check customer complaints to see if they have reduced. Maybe refer to another KPI as the other aim was to increase profits. 1 mark, nearly 2 marks 4. Apply Lewin’s change model to a contemporary business you have studied this year. (6 marks) Lewin’s Three step change Model provides a framework which a business-like Telstra can follow to ensure change is successful in the long-term. The 3 steps are unfreeze, change and refreeze. The first step is Unfreeze which is preparing and change the businesses current position so that it can undergo a change. Under this step Telstra will need to unfreeze by communicating the vison of improving customer service and

cut costs to stakeholders such as the customers and employees, by outlining the benefits and consequences of the restructuring the business which will help Telstra improve customer service and cut costs. You have not correctly explained the step of unfreeze The second step is change, which is the process of moving toward the desired state by implementing the actual change. During this stage Telstra’s management would need to evaluate the change and the strategies that need to be used to achieve the change. For example the management staff have noticed that the employees are resisting the cost cutting part of the change due to significant job losses. Telstra can overcome this resistance by providing a better redundancy package for the staff whose position no longer exists so that they can prevent the change from being successful. Maybe discuss supporting staff that have been made redundant. You need to mention making resources available The Final step is refreeze, which is embedding the change into the general culture so that it can be maintained in the long term. Telstra can explain the cost cutting advantages of implementing this restructuring change on their advertisements or website. Thus by reinforcing the change and allowing it to be successful at Telstra in the long term. Need to mention continued support and training of staff 4 Marks 5. Justify two corporate social responsibility considerations Telstra may need to address as it implements its restructure. (4 marks) A CSR consideration that Telstra may need to address is by supporting employees are they estimate that 8000 Telstra employees may be made redundant during the restructure which can lead them to lose their income. As a result Telstra can look after them by providing resume or CV services which can help the employees make their future employment opportunities more successful. Another CSR consideration that Telstra may need to address is by supporting the community as their will be significant disruptions to the local economy where the 8000 employees may have been living but may have to move due to having to find another job. As a result Telstra can look after the community by providing with local grants that can help future students get a better education or help local businesses by choosing to give contracts to them over overseas businesses. Great examples however you need an additional sentence that makes the link to the benefits to Telstra. Eg Better reputation, leading to increased sales and market share 3 marks

6. Evaluate the use of a low-risk and a high-risk strategy a contemporary business you have studies this year could implement to minimise resistance to change. 6 marks The low risk strategy of communication refers to the ability to create and exchange information from the sender and receiver, which allows feedback to occur. The manager of Telstra can employee two way communication as a way to understand the concerns of employees about the reduction of approximately 8000 staff who may fear be made redundant. By using communication skills and addressing concerns the fear and confusion of the employees may he reduced hence the possibility of resistance from the 8000 staff. Whereas communication can be very time

consuming as the management may need to listen to the 8000 concerns from 8000 employees which may take a long time to address. A high-risk strategy of manipulation refers to a form of persuasion that aims to force the employees of the business into accepting a specific change. The management at Telstra can use manipulation by only detailing to the employees the benefits of cutting costs without detailing the disadvantages of the restructuring. Thereby employees are more likely to accept the change due to the persuasion which minimise resistance to the change. Need to mention the negative impact this can have on corporate culture and the relationship and trust between management and employees 5 marks

7. Discuss a management strategy Telstra plans to use to seek new opportunities domestically. 4 marks A management strategy Telstra plans to use to seek new opportunities domestically is product diversification which is a strategy that involves a business attempting to increase sales and market share through the use of brand names and advertising by establishing differences between their product and substitutable products. Telstra planes to increase sales and market share through using the 5G network. An advantage of product diversification is that Telstra may gain a reputation for quality or some other feature for using the 5G network, this could also increase sales and market share as the Quality or uniqueness drives sales. A disadvantage is that it can be expensive to create the differentiation and so Telstra may need to charge a higher price which could decrease sales and market share. 8. Evaluate Telstra’s use of the following management strategies to improve it business performance. 6 marks a. Cost cutting Cost cutting is a strategy used to reduce expenses incurred in the production process whilst maintaining the quality and value of the service. The manager at Telstra can implement outsourcing as a cost cutting measure, which is contracting of specific business activities such as call centre customer service to an external business in another country. This can be a advantage as it reduces wage related expenses because labour costs are often lower overseas which can improve the profits of Telstra as it has cut costs. A disadvantage is that the local community may associated Telstra as attempting to negatively impact the local economy in Australia which can impact the level of sales that Telstra may have and also impact the number of customer complaints leading to a decrease in market share. Overall I believe that Telstra should cut costs as it can increase the net profit figure which can benefit the business. You need to refer to the specific cost cutting measures Telstra is implementing b. Investment in technology Investment in Technology is th...