TELSTRA CORPORATION LIMITED- CASE BACKGROUND

Your assessment:

Write a strategic plan for Telstra. When writing the plan, the following format should be

followed by using the principles of strategic planning, outlined in your textbook:

 

  1. Executive Summary

 

This includes a brief synopsis of the organisation including its history and current situation. Use trend analysis to explain historical performances of the organisation.

 

  1. Goals and Objectives

 

Define the goals and strategic objectives using the principles of S.M.A.R.T. You must include priorities, timeframes and resources required.

 

  1. Vision and mission

 Discuss the Vision and Mission. Included in your discussion is whether stakeholder support is

still current, whether you need to refine and review your vision and mission or develop organisational values as appropriate.

 

  1. Environmental analysis

 

Conduct environmental analysis using the principles of P.E.S.T.L.E., 5 Barriers to Entry and 4 M. When undertake the internal analysis, the 4 M scan must be backed by relevant research

and advice from experts obtained where necessary. Finally, you need to identify what will deliver a competitive advantage to Telstra.

 

  1. SWOT analysis

 

Perform a Strategic Audit (S.W.O.T.). You also need to compare your findings with

competitors and allies as well as considering co-operative ventures and any due diligence

required. In this analysis please use financial skills to consider resource implications of the strategic plan. For every threat identified please write a risk management plan.

 

  1. Gap analysis

 

Perform a gap analysis, including the documentation of gaps which can be found in research, identify what the company needs and what it already has.

 

  1. Implementation

 

Conduct a value chain analysis to gain differentiation advantage. Discuss the implementation of your plan, including circulating and communicating the plan and gaining support from all stakeholders and delegating roles and tasks.

 

  1. Review and evaluation

 

Discuss the review process using KPI’s and other monitoring and evaluation processes for

continual improvement and identify how review changes will be implemented. Also discuss the effectiveness of your plan and the methods for improving strategic planning processes in the future.

 

  1. Evaluation of achievements

 

Discuss how you will evaluate achievements of objectives at agreed milestones

 

  1. Legislations

 

Please discuss the anti-discrimination, ethnical principles, codes of practice, privacy laws, environmental issues and OHS related to your workplace.

PLEASE NOTE:

You will have to complete considerable research to complete your assessment satisfactorily however excellent information is available on Telstra’s own web site and on the Australian

Securities Exchange web site under company announcements. The Telstra code when searching this site is TLS.

 You will find “Investor Presentations” most helpful as well as the company’s annual and half yearly reports.

Also look for announcements with”!” alongside. These are of high importance as they are termed market sensitive. They are either good or bad news for investors.

 Use the following as a checklist, to make sure that before you submit your report you have

included the following:

 

□          Include answers to all questions

 □          Include provision for relevant legislations or regulations.

□          The word count for your report should be 2000 Words (±10%)

□          Presented in report format with report-style headings and paragraphs

 □          Use Times New Roman 12pt font, formatted at 1.5 line spacing, and text aligned to

the left.

 

□          Your report should also include both in-text references and a reference list at the end, using APA or Harvard style. You should have a minimum of 5 references. In order to be competent on this assessment, it MUST be evident that you have done research.

 

TELSTRA CORPORATION LIMITED- CASE BACKGROUND

 Once a mighty company, Telstra was a must have stock to have in any share portfolio. The company was 100% government owned until it was partially privatised in the mid 1990’s. Eventually, the Federal Government sold its whole stake in the Company in four tranches, T1, T2, T3 and the balance to the Future Fund.

 

T1 shares were issued at $3-30 each whereby the government sold a third of its shares raising $14 billion in the process. Following on from this hugely successful sell off, a second tier release (T2) was also spectacularly successful with an issue price of $7-40 in 1999 which reduced the governments holding to 51%.

 

Since then, the share value has been all downhill. T3 was a failure when only $3.60 a share was realised thus crystallising a 50% loss for shareholders who invested in T2.

This meant that the government could not sell off its remaining 51% without massively affecting other shareholders and overcame the problem by transferring ownership of the shares to the Future Fund. However, since then the Future Fund has sold the majority of its shares on the market and now has a very small holding in the company. As a result, many thousands of small Telstra shareholders have seen the value of their shares fall even further.

 

To-day, Telstra’s shares are trading at $2.99, approximately 20% less than when T1 was first listed. Many analysts believe the current share price is grossly over-valued and is only supported because of the generous fully franked dividends the company currently pays. The current dividend yield is around 14% once franking credits are considered. At times in the past, Telstra has had to borrow from its banks to maintain dividend payments, a practice that simply can’t continue.

Being a former government utility, Telstra’s culture has been more like a bureaucracy rather than a corporate.

This once mighty company has fallen from grace and is facing tremendous change in both its internal and external environments necessitating it to reinvent itself. Past management was in continual open conflict with the government of the day and in denial of the pending changes that will  affect its business. As a result, the current Minister for Communications, Stephen Conroy, has taken steps to strip Telstra of its monopoly position by establishing the National Broadband Network (NBN Co) externally from Telstra.

With the new NBN Co formed, Telstra will lose its monopoly on its fixed copper line network and will have to compete in the marketplace with approximately 500 competitors including the world’s largest communications company, Vodafone.

Fortunately for shareholders, Telstra has sensibly negotiated a very attractive settlement with the government and will transfer its wholesale copper network to the NBN Co for $14 billion payable over the next three years.

As a result, Telstra will have to reduce its workforce dramatically or redeploy workers into new areas where vacancies can be identified. Telstra will have to adopt NBN’s policies and procedures. This will raise many issues suc
h as a workforce restructure, training as well as a change in corporate culture.

 Making matters worse, management has previously slashed thousands from its workforce affecting the company’s culture which has resulted in extremely poor service levels, low morale and a failure to keep pace with potential competitors. Many of the jobs made redundant have been outsourced overseas, particularly in India. The effect has been a loss of many highly skilled workers and the need for overseas workers to be trained and re-trained in the new way of doing business.

 Telstra also has a higher cost base than any of its competitors. For instance, if a customer wishes to call Telstra on an accounts issue concerning their phone and their internet or Foxtel, they have to speak to up to three different parts of the organisation. This is because their IT platforms do not interface. This frustrates customers greatly. Further when a call is made, the initial response is computer generated and asks many questions including 100 point identification and details of the customer query. Once an operator takes over, these questions are asked again as the Telstra system does not capture and retain the information provided to the computer generated response. Even worse, once the customer is transferred to another operator to respond to the second and third query, the whole process of 100 point identification and other questioning starts all over again!

 Likewise, all other management systems fail to interface. A worker in Bigpond, the Telstra internet provider, cannot log onto Telstra’s own system or that of Foxtel, which Telstra manages on behalf of the consortium, which causes confusion and frustration for managers and staff alike, let alone the customer. Even within each department, the company has different systems. An accounts clerk cannot log into the service difficulties section.

 Finally, the Telstra IT department has isolated itself from the rest of the business. It sees itself as “special” and has developed its own internal culture. It retains ownership of systems developed and fails to provide little by way of support other than basic user training which greatly exacerbates the low levels of service. The IT department has a huge challenge ahead of it. It has to redesign systems to cater to the new world of NBN and work in a world where Telstra is no longer enjoys a monopoly position.

 Issues identified:

The new managing director faces many challenges which will require the reinvention of Telstra. As a

result, it will be required that Telstra’s new managing director will adopt and implement a new strategic plan.

After thorough evaluation, the following issues were found in the organisation:

 

  1. Telstra must identify how to integrate the new NBN into the organisation for the benefit of itself

and its customers.

Telstra will have to identify staff redundancies and redeployments and how each will be dealt with.

 Systems differ between departments and many employees are not aware of newly

implemented systems, policies and procedures designed to bring Telstra into its new competitive world.

 In the past, performance management has been autocratic or non-existent. The new CEO, David

Thowdey, accepts Telstra has to change, however there is no general policy to change performance management. At least, it hasn’t been communicated to middle and lower management or the workforce. Currently all systems in place have little or no connection with required new strategic goals or business plans and are not outcome focused.

 Both Telstra’s staff and managers are frustrated and confused with the multiple systems in place. Telstra must instigate a change programme designed to integrate systems.

 Such change will also bring about a need to overcome the lack of training on new systems which require technological support.

Telstra must become customer centric. Again a change programme designed to fix this problem is a priority.

 

  1. The company must adapt to change and develop a new culture to face and defeat competition.

 

  1. Telstra must identify new opportunities in order to replace the monopoly income previously

derived from the wholesale division.

 

  1. If Telstra has a higher cost base when compared to its competitors, it must identify ways to

reduce these costs.

 

  1. Telstra has lost its fourth M and without finding a way to replace it, the company is vulnerable

to competition.

Note: You should do some research on Telstra in order to accurately answer the assessment

questions. Suggested web sites are the Australian Securities Exchange (ASX) where you search

“company announcements” for the code “TLS” or Telstra’s own web site. A good source of information is contained in the various “presentation” materials provided on the ASX site.

 

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