Telstra Corporation Limited seeking business expansion
The report aims to examine the external factors controlling the market of Hong Kong and UK, as Australian telecommunication company Telstra Corporation Limited is seeking for business expansion in one of the countries of Asia or Europe whichever will be profitable for the organisation (Telstra.com.au. 2018). As it is the largest telecommunication network of Australia, Telstra is looking for international growth following the market trend of making global approach. The purpose is to identify macro-environmental and geo-political forces in order to assume the future of telecommunication on chosen foreign lands. A clear idea of legal and trade policies will help to frame them strategies of expansion. Moreover, the concern will be to find out opportunities and risks considering the external factors and policies according to Hong Kong and UK’s business environment. After a critical observation of both the markets, a set of recommendations will be included with this report, stating which country will be better for market entry as well as best strategies to maintain a sustainable business from the country’s perspective.
Within the telecommunication industry, Telstra is the largest networking group among all in Australia. It deals with telecommunication networks, mobile and internet linkage, television disc along with related materials and services. These services help the process of global communication through wires or even without it (Aksoy et al. 2013). Considering the increasing advancement of technology and data consumption, the company is seeking for new opportunities in terms of investment. As they have achieved immense success on national scale, for further growth as well the organisation wants to explore the international market, although the head office will remain in Australia only. As they operate communication overseas, irrespective of boundaries, it will be easier for them to maintain virtual teams via digital aid (Shahiduzzaman and Alam 2014). Based on their unique corporate strategy of simplified product line and services for being customer friendly, is true for any business market. The only aspect they have to consider is the business environment and trade policy of targeted foreign lands for expansion.
As Hong Kong possesses one of the most advanced telecommunication and flawless infrastructure of information technology among Asian countries, according to Barnes et al. (2015), this country is the first choice of many foreign investors dealing with telecommunication. Moreover, the population is enthusiastic enough for new technologies and electronic gadgets of popular brands. Although, other variables are included still acknowledging the interest of the market, Hong Kong would be a wise choice for expansion.
Although, UK is the largest telecommunication market with European background yet chances of tremendous competition is higher than the market of Hong Kong. The market is the home of telecom tycoons across the world like British telecom, Virgin media and Vodafone. Consumers prefer to have different kind of services with diverse configuration in return of varied prices. The market is best suitable for experiments and implication of innovative ideas. In order to expand business here, Telstra should operate with the help of wide range of innovative business models to dodge the competition as much as possible.
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Telecommunication industry in Australia
As mentioned before, Hong Kong is the freest country, as it does not apply any barriers on foreign investments. No extra charges have been implied on import and export of business goods. Although, according to Hamashita (2017), strict guidelines are followed to see if the products have authentic license or not with the interest of maintaining the social purpose of public health and security. Hong Kong is supporter of charges free and comparatively stable multi-cultural trading policy with high maintenance of security as well. Briefly, it can be said that because of lowest amount of tax, supportive legal structure and foreign investor friendly as compared to other European countries. Due to free trade policy, flow of capital in the market boost the economy simultaneously, from which both the investor and the country experience the benefit.
UK’s trade bill concentrates on sustainability of customer flow and business. According to the framework of UK trade remedies, UK has secured the advantages of executing free trade globally. As suggested by Oliver (2014), although they have prepared safe guard policies for domestic companies to provide security from unethical business practices. However, a regular habit of tax payment is considered as ethical business behaviour here. Paying customs duty depending on the nature of the product is under legal code of business while export and import. As far as the legislations decision is concerned the judgement is still on hold whether in future free trade agreement will be considered or not.
However, if both the trade policies are evaluated and compared it has been clearly observed that Hong Kong is more liberal as a field of foreign investment.
Potential risk
- According to Hoskisson et al.(2013), it has not been mentioned previously in the report, yet the market of Hong Kong as well is fiercely competitive as the location is home of several well established MNC.
- China shares a strong trade relationship with HK by supplying price-competitive digital equipment. Moreover, according to consumers’ trend they expect to have end-to-end support from a native brand mostly.
- Occasionally, foreign companies confronts with a dilemma whether HK shares same regulatory system or not as China. Again, HK’s demographic area is smaller than other Asian countries. There is a possibility of foreign investors to think that market can be bigger if they do not choose HK over other Asian countries.
Market opportunities
- Considering the technology savvy population, marketers choose Hong Kong among Asian countries to launch their new mobiles or gadgets.
- Both the public and private sector is dependent on virtual connectivity. Not only that, government has e-services offerings to the citizen and numerous companies use cloud services for their work and security purpose.
- Telstra can do experiments on innovative technologies, which are capable of enhancing the quality of provided services.
Potential risk
- Britain is home for giant business tycoons; therefore, market is tremendously competitive.
- Competition is so hard that new technologies are taking charge of the market frequently. Therefore, changes of substitution and imitation is higher here.
Market opportunities
- Acknowledging the intensity of competition, Telstra can think of acquiring an existing UK based telecommunication company to get started.
- Otherwise, direct exportation is a wise choice to enter the market. Unless Telstra can opt for joint venture or partnership initially.
After a detail research on market trend of two countries, it has been observed that at this point telecommunication industry is growing in Asian countries. Therefore, exposure will be better if Telstra launches themselves into expanding telecommunication market of Hong Kong. Hence, before entering the market Telstra should consider a guideline as mentioned below.
Strategies for entering Asian market: perspective of Hong Kong
- Technological solutions can be used for varied purposes yet focusing on single area of company strength is the key to sustainable business here.
- Considering one of the most advanced IT infrastructure of the country Telstra should pursue market research of expert level (Drnevich and Croson 2013).
- Asian customers likely to believe more in native companies when it comes to end-to-end commitment. Telstra should convince the market being entirely consumer-oriented.
- Although, globalization has made the process convenient, still if the company can be in a partnership or initiate a joint venture with a native, established telecommunication brand, then gaining customers’ trust will be much easier.
Conclusion
Comparing both the countries it has been recommended that Hong Kong would be the wise choice to make market entry for Australian telecommunication brand Telstra. UK is international market for business tycoons, fierce competition sustainability issues, comparatively complicated trade policy restrict fresher companies to enter with individual identity. For UK, Telstra has to rely on partnership joint ventures mostly. The cost of acquiring any UK based company can be a matter of high expenditure. However, if aspects are evaluated from the perspective of Asian country Hong Kong, people believe in native companies mostly. The idea of bringing variation in the market or serve the consumers with innovation can be applicable for this country. Moreover, trade policies are simple, based on the legal code as well. Therefore, Telstra can opt for Asian country for expansion in order to add new feather to their crown.
References
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Telstra.com.au. (2018). Telstra – mobile phones, prepaid phones, broadband, internet, home phones, business phones. [online] Available at: https://www.telstra.com.au/ [Accessed 25 Aug. 2018].
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