BIZ202 Macro Environment and Its Impact on Organization Telstra: Assessment Answer
The Business Environment
Environmental Scan Report – Part B
Telstra is the telecommunication company of Australia and was founded in the year 1975. The revenue of the firm is almost 26 billion Australian dollars, and they have about 32000 staff members. The country is having the stable political reform along with suitable economic factor. Australia consists of the diverse people of various region and culture, and also the country has a huge investment within the digitization for enhancing the service offerings. Telstra faces the direct impact of the regulatory changes that took place by ACCC and environmental sustainability while using the network service of 4G and 5G. The competitive rivalry within the telecom industry is high, then the bargaining power of the buyers is high. The bargaining power of the suppliers is considered to be moderate, a threat to new entrants is low, and the threat of product substitution is considered to be moderate.
The primary purpose of the paper is to discuss the macro environment and its impact on the business. To effectively discuss the situation, the organisation Telstra has been selected. It is the telecommunication company of Australia and was founded in the year 1975. The revenue of the firm is almost 26 billion Australian dollars, and they have about 32000 staff members (Telstra, 2019). The organisation serve the area of Australia and also worldwide with the selected products. The primary products of the firm are the fixed-line then the internet and data service along with the network service. They provide 98 percent coverage to the area of Australia with their suitable and effective plan in the telecommunication industry.
Identification and analysis of the micro environmental factors
The country is having the stable political reform that provides suitable value to the telecommunication sector. Moreover, it can also be seen that in the political condition of the country, the government is pushing for the regulatory reforms. The country is also having cordial global diplomatic relations, which is highly effective for the telecommunication industry to maintain the network system (Atighechian, Maleki, Aryankhesal, & Jahangiri, 2016). Telstra even faces the impact regarding the various rules and regulation within the country regarding the telecommunication network system.
The economic factor effectively reveals the desired economic performance of the country as well as it is considered to be highly essential for the performance of trade practice within the country (Doulgeroglou, 2015). It can be seen that the rise of the inflation rate effectively generates a huge impact on Telstra. Furthermore, it becomes quite crucial for the firm to understand the need of the consumers for maintaining the desired balance within the demand as well as the supply.
The rising expatriate population effectively help in the growth of the telecom service providers. Telstra effectively faces the social impact regarding the providing of best and suitable for the various people all over the country (Mattila, & Parkinson, 2017). Australia consists of the diverse people of various region and culture, which even allow the firm to provide its service plan according to the needs of the consumers. Social factor like the demographic then the cultural trend effectively help the firm to maintain change within the business procedure.
The country has a huge investment within the digitization for enhancing the service offerings as well as the customer experience. Moreover, it can also be seen that the leasing of the telecom infrastructure, as well as a network, is having an effective view for Telstra (Doulgeroglou, 2015). The use of suitable and advanced technology is highly essential for maintaining the competitive advantages and providing an effective network system to the consumers. Implementation of effective technology is highly essential for maintaining the changing trends within the country.
Telstra faces the direct impact of the regulatory changes that took place by ACCC within the country (Sutherland, 2016). Moreover, it can also be seen that the complex telecom regulation compliance law varies according to the country, so Telstra have to maintain the law in term of worldwide for their selected products. The employment, as well as the tax reform, is also maintained by the firm according to the legal activity of the country.
Telstra directly impacts the environmental factor as they provide the network services which are affecting the environment (Sutherland, 2016). The business needs to develop a solution regarding environmental sustainability while using the network service of 4G and 5G. Furthermore, it can also be seen that Telstra has developed various environments friendly network service that did not create much harm to the birds due to the ultraviolet rays from the telecom service.
Porters 5 Forces Analysis
The competitive rivalry within the telecom industry is high. The primary competitors of Telstra are Vodafone, primus, Optus, as well as orange (Možný, 2017). Due to the high competition level, it can be seen that Telstra has eventually expanded their concern in the various other markets of Asia-Pacific parts. Due to the high competition level, Telstra needs to provide their best service to the customers for maintaining their position within the market.
Bargaining power of the buyer
The bargaining power of the buyers is high in term of the telecommunication sector. It is the fact that the high competition level allows the consumers to opt for various telecommunication service option within the country (Sultana, 2016). Telstra is the largest web as well as a service provider in Australia and to maintain that position they need to effectively provide some of the best service plans with reasonable price to the consumers. It will eventually help the firm to maintain consumer loyalty towards the business.
Bargaining power of the supplier
The bargaining power of the suppliers is considered to be moderate as the sellers, and the organisation is having equal power regarding the buying of the raw materials (Možný, 2017). The organisation has suitable suppliers that help them with the advanced technology and providers for maintaining their value and their services within the field. The cost of the products to various suppliers is different, and for that, it becomes highly useful for maintaining the value of the firm and also for dealing with the situation.
The threat to new entrants
The threat to new entrants is low within the market as the formation of the telecommunication industry is quite problematic for the industry. Telstra is one of the best and the most effective network service provider within the country (Sultana, 2016). The industry is filled with the legislative policies then capital requirements along with the patents rights for the industry. The power of the new market entrants might get due to the high competition level within the market.
The threat of product substitution
The threat of product substitution is considered to be moderate for the industry because almost all the telecommunication has similar and some unique products (Magee et al., 2018). It is the fact that the entire activity of the firm is to develop their service plan in the unique way for maintaining the consumer loyalty within the field. The willingness of the consumers is to develop their market value and their service plan for dealing with the business activity.
Challenges and solutions
Challenges are as follows;
Technological innovation: The organisation is facing challenges regarding technological innovation within the market. The world is rapidly developing and for that maintaining the innovative changes within the market is highly essential (Esmailzadeh, 2016). The development of 5G network is highly effective for providing the best service to the consumers. Continuous advancement in the technological filed is highly essential for maintaining the activity of the firm.
Physical environment: The physical environment consists of the climate factor along with the geographic factor that the organisation faces within the external market. The firm has to face the challenge regarding climate change due to the experiment of developing 5G network system within the country (Oztunc, Demirbas, & Orhan, 2019). Another challenge in term of the physical environment is that people of the diverse geographic area has a diverse activity for providing the service to the consumers according to their needs.
Work value: Another challenge faced by the firm is regarding the work value as the employees needs to maintain the rules and regulation of the firm for maintaining their value and achieving the organisational goal (Esmailzadeh, 2016). Maintaining the staff members as well as their working function in the market is considered to be highly effective for the business.
The effective solutions for the challenges are as follows;
- It is highly essential for the telecommunication sector to enhance their skill and knowledge regarding the use of technology within the market.
- It is also essential for the firm to develop sustainable activity within the field and provide some of the effective value for the staff members within the market.
- The organisation also needs to maintain effective rules as well as regulation for dealing with the workforce within the firm.
The paper eventually concludes the fact that the organisation Telstra faces a huge impact due to the external environment on their business activities. The primary external environment impact on the business is due to the political factor, along with the economic factor and other factors that are highly affecting the value of the firm. The paper even concludes that the organisation are facing some of the huge challenges regarding the innovative technology along with the work value and even due to the climate and the geographic factor.