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The General Environment Consists Of Six Segments Marketing Essay

1811 words (7 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Telecom Corporation of New Zealand Limited Telecom is a company based on media and telecommunications industry offering telecommunications and information, communication and technology (ICT) services in New Zealand and Australia. The company has a headcount of about 8297 employees as of 2011 (Annual report of Telecom New Zealand, 2011).Telecom Corporation of New Zealand Limited is the largest telecommunications service provider in New Zealand providing consumers and business people with a wide range of products and services. Telecom operates under the following business units: Telecom Retail , Gen-i, AAPT, Telecom New Zealand International, Chorus and Technology & shared services (Annual report of Telecom New Zealand, 2011).

Today, Telecom plays a significant marketing leader role by owning more than one million fixed line customers and over two million mobile connections in the New Zealand telecommunications market (Annual report of Telecom New Zealand, 2011). However, the company’s total operating revenues and total gains for the financial year 2011 (ending June 2011) is about NZ$ 5122 million, a decrease of 2.8% over the financial year 2010 (Annual report of Telecom New Zealand, 2011).

Environmental factors

General Environment Analysis

According to Hanson, Hitt, Ireland &Hoskisson (2011), the general environment consists of six segments:

Demographic segment

Telecom’s major operations are carried out in New Zealand and Australia which contributes to very less population globally. The region consists of people from different ethnic groups like Maoris, Europeans, Asians and Pacific Islanders with lots of immigrants from different parts of the world. The major source of income is through salaries and wages; others include interests, investments and self-employment.

Economic segment

The New Zealand economy is suffering a quite slow recovery with the GDP result growing by 0.3 % in December 2011 quarter (New Zealand Statistics, 2012). Furthermore, the company’s revenue decreased in the year 2011 which is not a good thing in the industry. It also depends on the nation’s economic condition in the World Market. Sometimes recessions may also affect the company’s performance.

Political/legal segment

Telecom has its own governance objectives, policies, taxation laws and regulations for its employees. It should also be following the Telecommunication Act set by the Government. Furthermore, the Telecommunication Amendment Act in New Zealand will simplify telecommunications regulation and increase the marketing competition within the telecommunication service industry in New Zealand (Telecom New Zealand, 2012). The firm should also be following the Human Rights Act and Employment law for the firm’s employees. Legal proceedings are carried out for violation of laws and regulations.

Socio-cultural segment

Telecom consists of diverse set of people in the workplace who helps in the company’s success in the Global Market. The employees face a lot of challenges in order to meet the Company’s goals and objectives. It has a wide range of diversity programs such as Leadership programmes, Global Women programmes and flexible working policies (Annual report of Telecom New Zealand, 2011). Telecom foundation was recently started to do charity and community works. The firm also have concerns about New Zealand’s environment (Telecom New Zealand, 2012).

Technological segment

Since Telecom being a part of the telecommunications Industry, there are a lot of new technologies and innovations being created at a very fact pace. So the company must learn the new technology very fast so as to adopt the new technology ahead of its competitors. The company has also shown interest in the new technology called the Ultra Fast Broadband initiative which is a new technology for faster broadband connections (Telecom New Zealand, 2012). There is also a more focus of globalisation of technology and internet enabled services.

Global segment

Telecom is company that is based in New Zealand and Australia. So the company is not globally attracted. It should expand the organisation globally so that it can gain a competitive advantage over its competitors when they have a global presence in the industry. Globalisation always helps in creating opportunities and challenges for the firm which makes them more successful in the industry.

Industry Environment Analysis

According to Hanson et al (2011), the five forces of Industry environment consists of :

Threat of new entrants

Entry into the telecommunication industry requires a huge capital because they need to build a great infrastructure within New Zealand. The threat of new entrants will be lower in the industry because they have to compete with its well-established competitors. However due to lower switching costs between service providers, the new entrant may have an opportunity in the existing market share when their services are cheaper than the existing competitors. The government policies are also liberalized for entry in the telecommunication industry which is an added advantage. Overall, the threat of new entrants in the telecommunication industry is medium.

Planning Process and Strategies

From the above General Environment we can find factors that influence and also affect the industry in the form of opportunities and threats. These factors mainly depend on the competitiveness, market share, substitute products, supply and demand.

Opportunities can be listed as:

Growing broadband market with the introduction of ultra-fast broadband initiative in New Zealand which helps the company to gain more customers.

Mobile data services are being used more these days as people tend to use mobile for browsing the internet.

Increasing growth of mobile payment service which is an easy and a convenient way to do transactions due to more use of Smartphones.

Threats can be listed as:

Globalisation of the company is important to survive in the industry

Legal proceedings of the company involves more legal costs

Intense competition among the competitors acts as a threat in the industry

Team Structure And Dynamics

The industry consists of only a few potential competitors which is an advantage for the company. But there are also new competitors and also the threat of new entrants which lowers the company’s market share in the industry. The company has its own substitute products due to advancements in technology and thus when people want to switch from fixed to mobile connection; the company eventually retains its new customers. When the company is updated in the technological world, it will eventually gain new customers and also retain its own customers as well. Thus the bargaining power of suppliers is relatively high.

Bargaining power of buyers

The industry is characterised by large number of potential buyers who are independent in choosing their own service provider. Customers tend to choose their service provider based on the company’s customer service and price range. So the customers gain an advantage to switch to other service providers when required which decreases the supplier’s power. However when the buyers are in a contract period, the switching costs are relatively high which is an advantage to the suppliers. Thus the bargaining power of buyers is medium.

Threat of substitute products

Telecom is a part of the telecommunication industry and it has its own substitute products as the company has both fixed and wireless connections. Since the substitute products are there within the own company it is not found to be a key issue for the company. Thus overall the level of threat of substitute products is relatively low.

Rivalry among competing firms

The New Zealand Telecommunication Industry has its major competitors like Vodafone, Telecom, Telstra clear and 2degrees. The rivalry among these competitors is relatively high because of their different approaches in the industry. Vodafone is said to be the major competitor of telecom because of its global presence in the industry. 2degrees has also set a mark in the industry due to its cheaper prices and quality plans. Thus the rivalry among the competing firms is said to be high.

Competitor

The key competitors of Telecom across various business units are Telstraclear, Vodafone Group PLC, Hutchison Telecommunications (Australia) Limited, AirNet Systems, Inc, Woosh Wireless, CallPlus Ltd, Hewlett-Packard Company, IBM Corporation, Singapore Telecommunications Limited (SingTel), Two Degrees Mobile Limited, Orcon Internet Limited. Though Telecom is one of the largest communication industries in New Zealand, there are also potential threats because of its competitors. Vodafone is the largest mobile phone operator in New Zealand which is mainly because of its global presence in over 30 countries. 2degrees is also gaining advantage with low call rates and innovative plans. So Telecom should gain competitive advantage by expanding the organisation globally by providing quality service and cheap products.

Leadership:

Telecom following the democratic leadership. Democratic leaders make the final decisions, but they include team members in the decision-making process. They encourage creativity, and team members are often highly engaged in projects and decisions.

There are many benefits of democratic leadership. Team members tend to have high job satisfaction and are productive because they’re more involved in decisions. This style also helps develop people’s skills. Team members feel in control of their destiny, so they’re motivated to work hard by more than just a financial reward.

Because participation takes time, this approach can slow decision-making, but the result is often good. The approach can be most suitable when working as a team is essential, and when quality is more important than efficiency or productivity.

The downside of democratic leadership is that it can often hinder situations where speed or efficiency is essential. For instance, during a crisis, a team can waste valuable time gathering people’s input. Another downside is that some team members might not have the knowledge or expertise to provide high quality input.

Conclusion:

Telecom has a leading marketing position within the highly competitive marketplace. Currently the management of Telecom is facing some strategic issues in telecommunication industry. Some of the key issues are the Ultra Band Broadband initiative introduced by the New Zealand Government which is said to be the future of broadband connections in New Zealand. So Telecom should be very keen in providing better service to the customers with the new broadband initiative so as to gain a competitive advantage over other competitors.

The company’s profitability and revenue has also decreased in the financial year 2011 which is considered to be an issue in the market value of the company, so the company should try to gain more profits and revenues in the future. The company should also change its marketing strategies so that it can attract more customers in the future. With lots of new technologies being innovated the company can use these technologies to market their products and services so as to create positive market position in the industry.

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