Discussion based on the relevant topics
Business environment of an organization is mainly based on the combination of the external and internal factors in which the organizations operate. The business environment of the organizations is further based on different factors which include, the suppliers and clients, the owners and competition, government activities and laws, economic and social trends and the improvements that are required in technologies. The factors based on business environment are able to affect the revenues and levels of profitability of the business as well. The organization which has been considered for analysis in the report is Telstra (Bamiatzi et al., 2016).
Telstra Corporation Limited or Telstra is one of the largest organizations in Australia which operates in the telecom industry of the country. The operations of Telstra mainly include different area like, networks of telecommunication, mobile based internet access, pay television and other different services and products. The company had started its operations with the Australian Post and further it was privatised which led to a change program. The changes in the organization had taken place in Telstra after the appointment of David Thodey as the new CEO (Telstra.com.au., 2018).
According to Burns, Bush and Sinha (2014), the PESTLE analysis based tool is a strategic process which is helpful in analysing the macro environment of an organization. The different external factors which are able to affect the operations of Telstra include, the political environment, economic situation, social conditions, technological factors, legal factors and environmental factors as well. The analysis of these factors can done as follows,
Political factors – As discussed by Gomes et al. (2015), the political factors play a major role in the proper determination of the long term based profitability of Telstra. Telstra has its operations many different countries of the world and its activities are thereby exposed to the risks in political environment. The political stability affects the telecommunications sector in a huge manner. The corruption based levels of the country are important factors which can have an immense effect on the effective operations of Telstra. The prices of different services and products that are offered by Telstra are thereby influenced by the tax based rates of different countries.
Economic factors – According to Hill, Jones and Schilling (2015), the macro environment based factors which are able to affect the revenues of Telstra include, savings rate, interest rate, inflation rate and the foreign exchange based rates which are prevalent in different countries. The competitive advantage which has been developed by Telstra is affected by the economic situation in the country. The growth rates of different sectors can affect the levels of operations of Telstra in different countries. The levels of intervention of the government in different economic operations of the country can have a major impact on the organization.
PESTLE analysis of Telstra
Social factors – The culture which is followed in the country is able to have a huge impact on the culture of Telstra. The attitudes and shared beliefs of the consumers can play a key role in the ways by which the marketers of Telstra are able to understand them. The demographics and skill based levels of consumers can affect the policies which are developed by Telstra. The other social factors which can affect the operations of Telstra mainly include the leisure interests and culture of the consumers (Ibrahim & Primiana, 2015).
Technological factors – The telecommunications industry is based on the fast disruption of different technologies. The technological developments which are made by the competitors of Telstra Corporation can affect the levels of profitability of the company. The impact of technological implementations is quite high on the cost structure of the organization. The value chain based structure of the telecommunication based sector is affected by changes in technology.
Legal factors – As discussed Jenkins and Williamson (2015), the legal framework which has been developed in different countries can have an immense effect on the operations of Telstra. The evaluation of the legal framework of the country will play a major role in the ways by which Telstra is able to develop its policies and procedures. The different laws which are have an impact on Telstra mainly include, anti-trust laws, employment laws, safety and health based laws and discrimination laws.
Environmental factors – The various markets and countries are affected by different norms or the environmental standards that can affect the levels of profitability of Telstra. Telstra needs to analyse the environmental policies which are developed by different countries which can have a major impact on its revenues. The laws which are able to regulate the pollution based factors are considered effectively by Telstra in order to develop its operations (Madsen & Walker, 2015).
As discussed by E. Dobbs (2014), the Porter’s five forces framework can be used in an effective manner for the analysis of the industry in which Telstra operates. The analysis of industry is an important part of the examination of the business environment. The different forces which are able to affect the operations of Telstra are as follows,
Threats related to new entrants – As discussed by Nag, Han and Yao (2014), the new entrants or organizations which enter the industry can affect the revenues and levels of profitability of Telstra. The lower levels of prices which are offered by the new entrants put immense pressure on the revenues of Telstra. The innovation based on new services and products is an important part of the entry made by new companies.
Porter’s Five Forces analysis of Telstra
Bargaining based power of the suppliers – The suppliers are able to play a major role in the ways by which organizations are able to operate in the industry. The suppliers are can have an impact on the margins of the organizations. Telstra can decrease the effect of suppliers on its operations by developing an effective supply chain. The formation of dedicated suppliers is considered to be a major part of the development of a supply chain (Rao & Reddy, 2015).
Bargaining related power of buyers – The buyers of the organization can affect the prices of different services and products which are offered to them. The demands of the customers can put pressure on the revenues and levels of profitability of the company. The customer base of Telstra is quite powerful in nature. The offers and discounts which are thereby offered by the company can have a major impact on the power of these customers. Telstra can reduce the power of these customers with the help of effective levels of innovation. The new products are also able to attract the customers towards Telstra (Wheelen et al., 2017).
Threats based on substitute products – As discussed by Hill, Jones & Schilling (2015), the new services and products that are offered by the other organizations can affect the needs and demands of customers in a huge manner. The threats based on the substitute services and products can impact the value proposition of the company. Telstra can differentiate itself from the competitors by becoming more service oriented in nature. The switching based costs of the customers are able to impact the decisions which are taken by Telstra Corporation.
Rivalry among existing players – The levels of rivalry which exist in the telecommunications industry are quite intense in nature. The overall levels of profitability of organizations are affected by the competitors of Telstra which operate in the industry. The highly competitive telecommunications industry in which Telstra operates has a major impact on the levels of profitability of the company. The development of the sustainable differentiation in the industry is considered to be an important process by which rivalry based levels in the industry can be maintained effectively (Wheelen et al., 2017).
As discussed Jenkins and Williamson (2015), the industry in which modern organizations operate plays a major role in the ways by which they are able to gain profitability in the industry. The five different forces which have been discussed above are thereby able to affect the different policies that are developed by the organizations. The operations of Telstra and the levels of its profitability are also affected in a huge manner by the different forces that are suggested by Porter’s. The analysis of these forces are able to provide an effective picture of the external business based environment of the organization. The analysis of the business environment is thereby able to provide an insight based on the ways by which the companies can develop their operations.
Conclusion
The report can be concluded by stating that the external business based environment needs to be analysed in order to develop the operations of modern organizations. The external environment based factors are changing continuously which further leads to changes in the policies and procedures of the companies. The analysis of Telstra has also been able to depict that the company and its policies are affected by the environment of the business. The industry based factors are also able to affect the levels of profitability of modern organizations like Telstra. The external environment is thereby able to play a major role in the revenues and profitability based levels of different organizations.
References
Bamiatzi, V., Bozos, K., Cavusgil, S. T., & Hult, G. T. M. (2016). Revisiting the firm, industry, and country effects on profitability under recessionary and expansion periods: A multilevel analysis. Strategic management journal, 37(7), 1448-1471.
Burns, A. C., Bush, R. F., & Sinha, N. (2014). Marketing research (Vol. 7). Harlow: Pearson.
- Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Gomes, C. M., Kneipp, J. M., Kruglianskas, I., da Rosa, L. A. B., & Bichueti, R. S. (2015). Management for sustainability: An analysis of the key practices according to the business size. Ecological Indicators, 52, 116-127.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2015). Strategic management theory. Cengage Learning.
Ibrahim, R., & Primiana, I. (2015). Influence Business Environment on the Organization Performance. International Journal of Scientific & Technology Research, 4(4), 283-293.
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis. Routledge.
Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.
Nag, B., Han, C., & Yao, D. Q. (2014). Mapping supply chain strategy: an industry analysis. Journal of Manufacturing Technology Management, 25(3), 351-370.
Rao, N. V., & Reddy, K. S. (2015). The impact of the global financial crisis on cross-border mergers and acquisitions: a continental and industry analysis. Eurasian Business Review, 5(2), 309-341.
Telstra.com.au. (2018). Telstra – mobile phones, prepaid phones, broadband, internet, home phones, business phones. Retrieved from https://www.telstra.com.au/
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. & Bamford, C.E. (2017). Strategic management and business policy. pearson.
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