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
Excerpts
Telstra's Growth Strategy
In its efforts to become more customer-focused, Telstra made minor changes in its organizational structure in the fiscal 1995-96. The changes were made on the basis of key customer groups (corporate and government), geographical scope (international business) and product areas (mobile communications and national directories). Similarly, the functional discipline, Employee Relations was split into Personnel; Learning and Development; and Center for Leadership. As per the revised structure, the Corporate, International and Enterprises SBU was renamed Business and International unit. One of the key changes in the structure included the creation of Telstra Multimedia Private Limited. This unit was responsible for managing broadband network, the FOXTEL pay television, providing Internet services and maintaining the existing portfolio of directory services, yellow pages and multimedia products. The creation of this group was in sync with Telstra's broadband strategy. In the short term, Telstra wanted to add new revenue streams (like Pay TV, Internet etc.) to its already developed basic telephony market...
The Reorganization
Previously, Telstra was organized into five SBUs - Commercial and Consumer; Business and International; Retail Product and Marketing; Network Technology Group and Multimedia and Carrier Services Group. Under the new structure, the Carrier Services Group, whose financial performance had deteriorated since the fiscal 1997, was abolished. The company's wholesale operations were consolidated as one unit - Wholesale and International. This unit was formed by merging the previous Carrier Services Group into the Business and International Group. In order to concentrate on the mobile communications market, a new SBU called Telstra On Air was created. Through this separate unit, Telstra aimed to focus more on its Code Division Multiple Access (CDMA) mobile network introduced in August 1999. Telstra viewed CDMA as the technology which would drive the growth of its mobile business into the 21st century...
The Reasons
Since 1997, Telstra had been making modifications in the structure of its SBUs in almost every alternate year. Analysts and industry experts felt that all these reorganization initiatives were Telstra's response to the rapidly changing business environment since the 1997 deregulation of the Australian telecom industry. Between 1997 and 2003, the competition in the Australian telecom sector intensified significantly. Several small time ISPs had grown into cross-country carriers while companies offering Internet & mobile services had emerged into full-service carriers. Starting from the late 1990s, Telstra increased its focus on emerging business sectors such as mobile communications and content that yielded improved results. To strengthen its competitive position in the mobile communications business, Telstra made massive investments to develop the GSM and CDMA networks that covered 95% of the Australian market served by 4000 retail outlets. The number of Telstra's mobile customers increased consistently as the company launched value added service offerings such as short message service (SMS)...
Exhibits
Exhibit I: Telstra's Organization Structure (1995)
Exhibit II: Telstra's SBUs and Functional Disciplines (1995)
Exhibit III: Telecom Industry in Australia
Exhibit IV: Telstra's Strategic Business Units (1998)
Exhibit V: Telstra's Strategic Business Units (1999)
Exhibit VI: Telstra's Strategic Business Units (July 2000)
Exhibit VII: Telstra's Strategic Business Units (July 2001)
Exhibit VIII: Telstra's Stock Price Chart (1999-2004)
Exhibit IX: Telstra's Strategic Business Units (January 2003)
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