Telstra Corporation: Reorganizing Strategic Business Units
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Case Code: BSTR123 Case Length: 20 Pages Period: 1995-2004 Pub Date: 2004 Teaching Note: Available |
Price: Rs.500 Organization: Telstra Corporation Industry: Telecommunications Countries: Australia Themes: Corporate Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Telstra's vision is to enhance its position as the leading telecommunications and information Services Company in Australia, and to become a leading provider of such services in the Asia Pacific region."
- Telstra Corporation Annual Report 1997.
Introduction
In January 2003, Telstra Corporation (Telstra), Australia's largest telecommunications company, announced a reorganization of its strategic business units (SBUs). This was the sixth reorganization exercise announced by the company in the past eight years.
Analysts remarked that this was aimed at adjusting to the fast - changing business environment that the company faced. Telstra is one of the oldest companies in Australia. Owned by the Australian government, the company enjoyed a near monopoly status in the Australian telecom industry until 1997, when the industry was deregulated. In 1997, Telstra was engaged in four basic telecom and information businesses - providing telephone exchange lines to domestic and business customers; providing local and long distance telephone calls within Australia and international calls into and out of Australia; offering mobile telecommunication services; and supplying a wide range of data, Internet and on-line services through diverse communication channels like its Pay TV, mobiles, PCs and so on.
With the entry of several private players in the telecom business after deregulation and the convergence of the information, communication and entertainment industries, Telstra was faced with an increasingly competitive market by the late 1990s.
Telstra constantly responded to the changes in the external business environment by making internal changes such as reorganizing its SBUs to make them more customer-focused. However, despite its efforts, the company's financial condition did not improve. In the late 1990s, in its efforts to rapidly grow its business, Telstra went on an aggressive acquisition spree, spending millions of dollars. However, most of these acquisitions yielded disappointing results. Several analysts questioned the ability of the company to cope with the fast changing external business environment. They felt that to be successful, Telstra needed to stick to its basics. One analyst, Hallwright said, "Telstra needs to accept that it is in a low-growth industry, and just try and manage what it has got as well as it can."
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