Strategy Analysis for the Australia Post Limited - Case Study Example

Strategy Analysis for the Australia Post Limited Table of Contents Table of Contents 2 Introduction 4 History of the company 4 The Development and Growth of the company 4 Vision & mission 5 Managing the Strategy-Making Process for Competitive Advantage 6 Product Range 6 Purpose and values 6 External Analysis: 6 The Identification of Opportunities and Threats. PEST Analysis 6 Political/Legal 6 Economic 7 Social 7 Technological 7 The fives forces 8 Threat of New Entrants 8 Bargaining Power of Suppliers 8 Bargaining Power of Buyers 8 Threat of substitute products or services 8 Rivalry among Existing Competitors 8 Internal Analysis: 9 Personalization 9 Differentiation. 9 Ratio analysis 9 ROIC 9 Current ratio 10 Strengths 13 Weaknesses 13 Opportunities The company is able to achieve its value in terms of profit from business operation since, There are opportunities in this services employing the company’s network of controlled precisely with sufficient fit. This is apparent in its move into general insurance business. Moves into car insurance business is another opportunity for then business to tribute current over the counter banking business, global money transfer, paying the bills as well as checking of identity (Henry 2011). 14 Threats 14 Building Competitive Advantage through Functional-Level Strategies 14 The low cost strategy 14 Product differentiation 14 Product Development 15 Market development 15 Vision & mission 15 Strategy and Technology 16 The company's structure and control systems and how they much its strategy 16 Strategy in the Global Environment 16 Internalization strategy 16 Localization strategy 17 Process reflection 19 Difficult issues encountered 19 Key learning on strategic management 19 Concerning the Management Functions 19 Concerning the team spirit 20 Other reflection on process 20 Reference list 21 Executive summary The aim of this report is perform strategic analysis about Australian post as wlel as consider business viability in postal areas as well as providing recommendation in areas that needs improvement as well as business opportunities that Australia post should capitalize in order to remain a price leader in postal services across Australia and the globe. To establish if any alteration are required to guarantee the ultimate faces from the postal services, it is mandatory to comprehend the existing structure as well as operation of Australian post. In regards, we will understand the framework for the operation of the company inclusive of the transparency of the board as well as the state’s directives to the company as well as provide an overview of the operation of the company activities in mail collection and soupy, sorting and logistics (Charles Hill 2014). The company is wholly controlled as well as has its activities as well as duties set out in the Australian post corporation. The main constituent of the company’s governance entail the direction provided by the act other state principle for the operation, the boards’ corporate aims as well as the company law. Introduction History of the company Australia post depicts the legislative control to deliver the volume mail. Appreciating the intricacy as well as opportunities. Australia post in recent times has moved far from old business of delivering mails to appreciating more wide logistic industry. In recent times, there have been changes in the company business operation and the volume of letters sent in Australia is growing, individual letters as declined nevertheless, as this account to 5% of the entire mailing growth in commercial as well as volume mailing depicts a more than a made up for this. Consequently it as created Technical, supply chain as well as courier resources to adhere to the requirement of the business. This is due to the change in business operation across the globe in terms of technological advancement as well as the rise of private courier services (Charles Hill 2014). The Development and Growth of the company In an intricate financial situation, the Australian post continue to earn net profit in the financial year 2014/15. Australia post is at the front position of globalization in the postal industry to attain the price leader in the competitive market. As a price leader to determine itself in latest opportunity market will create a strong basis upon which it might upright blockade to entry in the market. In executing the strategic constituent, Australian post must have an investment diversification .The company is committed toward increasing the returns from operation as well as venture in re-merchandising as well as updating its stores outlets across the country in order to depict the changing social-cultural tendency in the postal market, this strategic element will lead to increase in profit margin and thus the company must continue to implement it into the future. The continuous growing trend in technology as well as wide impact of technology has socially and economically depicted an impact on the Australia post business (Michael Hitt 2008). The change to electronic information from the old approach depicts a continuing decline effect in the old approach to doing business (Charles Hill 2014). Nevertheless, the growing trend in online business; lead to increase in m ore packages required to be delivered personally from the sellers to buyers. The Australia post has been meeting its demand, the technology permitted the company network to offer a wide sort of business as well as financial services thought the country with preponderance of this being the SAP enterprise system as well as extra system entailing the HR as well as point of sale. It will aid latest business offering, enhancing transportation as well as time management (Charles Hill 2014). Vision & mission The company mission and vision statement has been fixed since 1989 when the business was incorporated. However, few changes was established in the company’s vision in order to ensure that the company cop with the change in business operation as well as remain a price leader in the postal service in Australia and across the globe. Purpose has been expressed by way of APC Act that set the public services and commercial service aim. The Australia post proceeds to play a vital role in the requirement if Australian communities as well as make easy commerce in a modern business. The main function of the company according to APC Act is to deliver postal services across the country as well as between Australia and places outside the country. While doing this, the company provides the best services to the public as well as operates commercially as well as attains a realistic return on asset (Finlay 2000). Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage Product Range Australia Post is prearranged into one main business components of parcel with two segment as follows : logistics and letters. The agency services as well as retail product provides a signs how the company has moved far from the old approach to doing business for the last ten years, the parcel and logistic business has surpassed the letters business by way of contribution in net profit generated by the business. The company is the major company in Australia with more than 35509 employees across the entire business unit (Finlay 2000). Purpose and values The company is committed helping community, clients and the people to build a better future by promoting the wellbeing, safety as well as health, appreciating everyone, helping and enhancing the li9fe of people. The main aim is to provide superior effective services to the public as well as enacting the shareholders worth (Furrer 2010). External Analysis: Industry Analysis This entails the comparison of the company’s performance with external market in order to appraise the effectiveness of the company performance in relation to market trend. This is an important tool in appraising the business performance since it will provide an insight as to business operations as well as areas that need improvement (Tomohis, 2014). Industry product or services The Australia post majorly focus on parcel as the main business with more income derived in this segment and as a result, parcel business operation for Australia post will be significant for our analysis. In order to get an insight into industry analysis, we will use the Michael porter’s five forces analysis as depicted below. The Identification of Opportunities and Threats. PEST Analysis Political/Legal The letters business is controlled by many pieces of legislation. The department of broadband communication as well as the digital economy oversight as well as policy development to comply with Australian public social as well as economic requirement. The Australia postal marketplace is managed as well as in compliance with the Australian Postal Corporation Act 1989 (APC Act). (Department of Broadband, Communications and the Digital Economy Web Site, 2010) All areas of Australia Post must comply with the Trade Practices Act 1974 (Charles Hill 2010). Economic The Australian post operates as a monopoly in specific place across the country and thus competes in other competitive local as well a foreign business. Itsparcelbusiness is monopolistic in nature, nevertheless, the logistic business as well as organization services contends with main global business. Australia post must be very strategic as it transforms with the change in technology and competitive business environment as well. In recent times, the company as attained growth in revenue. Nevertheless, because of the worldwide financial crisis as well as stunted economic growth, the net profit for the business has been declining by 36%. There was a profit before tax of $390.8 million as opposed to the previous year’s reported net profit of $ 593.2 million (Michael Hitt 2008). Social The change in the demography of Country’s to an aging populace depict an effect in the company since the less capable to tour places more reliance to centre for their banking, insurance as well as Utilities payment necessities that is being offered by Australian post (Charles Hill 2010). This is signified by the truth that the firm business as well s retail was the ideal doing trade unit with sales expansion of 3.4%. As the county proceeds to becoming global economic hub with numerous of its population born abroad, parcel as well as logistic is increasing as well. The Australia based parcel transport declined from 5.2 billion to 4.8 billion. Technological The continuous growing trend in technology as well as wide impact of expertise has communally and cost-effectively depicted an effect on the company’s trading. The change to E-information from the old approach depicts a continuing decline effect in the old approach to doing business. Nevertheless, the growing trend in online business; lead to increase in m ore packages required to be supplied personally from the vendors to consumers (Sekhar 2009). The fives forces Threat of New Entrants Because of the legislative as well as past situation of the previous logistics, there has been low threat of new entrant in the market. Ion the agency services, Australian post is competing with the entire main firms with wide client face to face networking. This entails the banks as well as insurance firms that are in a position to agency services to current as well as new client. The company is the principal in the marketplace with main danger in parcel industry where the main global firm is able to enter the market (Charles Hill 2014). Bargaining Power of Suppliers The suppliers depict small bargaining lower since; Australian post is the main as well as monopoly firms in this industry. To have a right of entry to the company’s system of shop fronts for the trade as well as agency services, it will require to be complied with (Michael Hitt 2006). As parcel as well as logistic is its very competitive business segment, suppliers as well as other transport require an improved technology such as SAP do have negotiating deal as a supplier. Bargaining Power of Buyers The control the Australian’s post monopoly situation in the previous market, the precise location of courier services is controlled by the government division managing the Country sot with participation from the productivity commission (Charles Hill 2014). This impact the commercial buyers since it amount to 80% of the there parcel posted in Australia. An increasing field is the with direct marketing communication entails the 15% of the postal mail. Threat of substitute products or services The main replacement service is the E-communication of information for individual as well as business mail. Online payment of bills as well as supply of financial, insurance as well as utilities may as well be serviced online. Rivalry among Existing Competitors As stated the key completion is in the parcel as well as logistic segment. To be competitive in this segment, Australian post obtained state store and Distribution services. This is really boosted the post logistic business, providing the company standing as we, as current client base from SWANDS customers. Strategic coalition is being created to cover courier shortages in Australian postal system. This entailed coalition with the star express to cover road freights as well as coalition with air freight which lead to improved business to business as well as business to customer’s capability (David Williamson 2013). Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability Personalization This is another industry that is gaining popularity globally. With this increasing tendency, customers are following product that reflect their personality. Industry retailers winning in assuming to this personalization trend will attain strategic competitive advantage in the market. Differentiation. This is connected with the company’s services. In concentrated market, competitors are reputedly in look for approach to establishing themselves. For the corporation using the low cost general strategy, this differentiation is centered on low prices (John L. Thompson 2010). Nevertheless, the upper level business should differentiate their business in other method such as the private branding. Ratio analysis ROIC 2014 2013 {ROIC =Net income-dividend/total capital} 6,383.30 5,893.20 1,762.70 1,682.00 3.62132 3.503686 It can be observed from the above analysis that there is an increasing trend in return on invested capital which implies that the business is a viable venture due to the fact that shareholders are guaranteed of positive returns form capital invested in Australia post. Current ratio Current asset/current laities} 2014 2013 Current asset/current liabilities} 1,237.40 1,239.90 2,888.50 2,719.50 0.428388 0.455929 The current is declining which is an indication that the working capital of the company will be at risk. this is because, the rate of increase in current liabilities is much faster than the increase in current asset and consequently, the business should consider improve the debt and creditors management in order to ensure that the debtors takes the shortest time to repay their debt while creditor are allowed the longest time before being paid their debt by the company. In this regards, the working capital of the company will be effective ((Post 2014). ROE= {Profit/equity} 2014 2013 ROE={Profit/equity} 1,355.00 1,271.70 1,762.70 1,682.00 0.768707 0.756064 The return on equity is growing which implies therefore that the business is able to pay its financiers dividend as and when they fall due for repayment due to profits growing each financial year. In this regards, the company is a going concern. Debt to Equity ratio=Total debt [liabilities] / total assets) 2014 2013 Total debt [liabilities] / total assets 1,670.00 1,935.40 1,762.70 1,682.00 0.94741 1.150654 The ratio of debt to equity is declining and thus it implies therefore that the company is managing its debt well as well as ensuring that is an optimal capital structure which is a mix of debt and equity (Post 2015). SWOT Analysis The SWOT analysis is significant for the business operation since, lead to business identification of weakness as well as areas that need improvement and also identification of opportunities to be exploited such as diversification into financial services. The tool was therefore significant for appraising the company business operation as well as ensuring that it remains a price leader in the postal industry (Jeffrey Harrison 2015). Strengths The company’s strength is merely in distinctive competency as well as their value chain in providing for coordinated business operation across the segment. The business focus on providing quality product through constant innovation and efficiency in their business operation. Sturdy brand name with the community but as well control planned judgment as well as positioning of the trade unit to comply with the anticipated intricacy. The company has created a strong connection in Asia pacific region in order to supply a comprehensive logistic to their customers. The coalition between the company and the china post to supply end to end direct to client from Australia main import/ export partner. The Australian post is the 3rd biggest market importation of goods to the country(Gene R. Tyndall 2009). Weaknesses With an obligation to provideparcelservices might be costly to the company in the future where it turn to be unviable. The company has expanded its operation in an effort of providing agent services. In the year 2007, it put numerous property into advertising the jetsar voucher but had to up remove prior to realizing that it will depict an exemption from travel agent permit requirements. Opportunities The company is able to achieve its value in terms of profit from business operation since, There are opportunities in this services employing the company’s network of controlled precisely with sufficient fit. This is apparent in its move into general insurance business. Moves into car insurance business is another opportunity for then business to tribute current over the counter banking business, global money transfer, paying the bills as well as checking of identity (Henry 2011). Threats The external threat is from the social trending of low employment of paper letters. This is apparent from global trend in latest years which might pout the expense of letters out of the market (Hiriyappa 2013). There is the threat of moving from global players in the whole end to end courier services which is provided by the Australian post Building Competitive Advantage through Functional-Level Strategies The low cost strategy The business is committed toward ensuring that it has the lowest cost of delivering the mails across the word at low cost. In this regards, it can be observed that Australia post ensure that the letter, mails as well as parcel s are accessed through a suitable network of retail outlets complemented with electronic mail lodgment. Product differentiation The company has diversified its production into harmonizing business as well as community service division. Extending the sort of digital communication products and services existing in retail outlets. The diversification is built on the company’s asset as well as uniqueness as a communication company which entail growing the variety of the digital communication product as well as services existing in retail stores specifically to individual who can’t have access to digital communication (Henry 2011). Functional level strategy has lead to improvement of business operation since, it encourage coordinated business through decentralization of business operation and harmonization of department activities. Corporate level strategy Product Development The Australia Post is gaining a competitive edge in the market since, it’s likelihood of developing a new product and services is proportionately to the magnitude of initiatives it promotes as well as the number of tracks subsequent from the sense primary put for Gary, the company must take into consideration creation of modernization portfolio which will entail the portfolio of initiatives of plausible but un-experimented latest business ideas as well as low cost market penetration and portfolio investment. The company is having an innovation hub that may as well create a locus for networking, modernism, seminars as well as events concerning the innovation. It may boost the company’s interest in innovation to the growing community as well as where relevant, partner with the growing firms in expanding technology chances (Hiriyappa 2013). Market development The deregulation in Europe leads to opportunities for Australian post to expand as well as grow in the new foreign market in neighboring states as well as create scale. These opportune are inadequate in the company’s context. Vision & mission The company mission and vision statement has been fixed since 1989 when the business was incorporated. However, few changes was established in the company’s vision in order to ensure that the company cop with the change in business operation as well as remain a price leader in the postal service in Australia and across the globe. Purpose has been expressed by way of APC Act that set the public services and commercial service aim. The Australia post proceeds to play a vital role in the requirement if Australian communities as well as make easy commerce in a modern business (Michael Hitt 2008). The main function of the company according to APC Act is to deliver postal services across the country as well as between Australia and places outside the country. While doing this, the company provides the best services to the public as well as operates commercially as well as attains a realistic return on asset. Vertical integration When it come to control of the operation, it is apparent that the company is employing the Vertical integration integration since, it can be observed that there is coordinated business activities between department both locally and across the globe and thus leads to enhanced business operation due to decentralized business operation from top to lower level management leading to a vertical integrated business activities this leads to reward of the company’s executives due to company better performance in terms of profitability and set target and objective of the company (Gerardo R. Ungson 2009). Motivation thus leads to more productivity for the company. The company is as well having an investment diversification into financial services which lead to growth in business operation across the globe and consequently an increase in reported net profit. Strategy and Technology The company's structure and control systems and how they much its strategy The company is wholly controlled as well as has its activities as well as duties set out in the Australian post corporation. The main constituent of the company’s governance entail the direction provided by the act other state principle for the operation, the boards’ corporate aims as well as the company law. In this regards, it can be observed that the Australia post is having the correct level of vertical differentiation since, the business is having a structured level of business control, from top to bottom line organization level which encourage decentralization of activities as well as control, to the assignment supervisors which thus leads to coordination and harmonization of activities between department and the top level management (Paul N. Finlay 2008). The board of directors for the company are held answerable to the assembly though accountable minister for its performance. This structure is therefore significant for the business operation since, it lead to expansion and decentralization of business activities leading to growth and expansion in terms of profitability of the business. Strategy in the Global Environment Internalization strategy In recent years, Australia post has entered into a contract with other foreign firms in the postal services in an effort of going global. The company has created a storing connection in Asia pacific region in order to supply a comprehensive logistic to their customers. The coalition between the company and the china post to supply end to end direct to client from Australia main import/ export partner. The Australian post is the 3rd biggest importer of goods to Australia (Gene R. Tyndall 2009). Localization strategy The logistic operation for Australian post as well as the company’s services assert with key business within Australia and across the globe and thus the company need to employ strategic management and thinking en effort of transforming business locally in order to remain the market leader in the courier services. This is due to the competitive business advantage that Australian post has over same business in term of monopoly in Australia and consequently, position the company in a strategic place in order to dominate local market by being the price leader in the postal industry. Recommendation and Conclusion It can therefore be concluded that a very significant issue for the anticipated business as far strategic management is concerned is the sustainable administration as well as the supply chain control which in turn would lead to savings as well as control the environment. Moreover, it is advice to alter the marketing plan (Gene R. Tyndall 2009). The business must be adapted to the local traits of the country. In this regards, the clients may recognize more with the promoted product. The company must as well segment the market diversely for the client’s age within regards to packaging may be promoted to users of the mails services across the country and globally. In order to explore global market, the Australian post should consider increasing the amount of research and development in order to ensure that it remains the market leader in postal business despite the growing pressure both from local and global courier services. The business must as well ensure that it has a team spirit among its personnel as well as allow for an integration of division both local and global investment in order to ensure that there is improved productivity as well as increase in level of reported net profit. It can therefore be recommended that an investor should consider investing in Australian post limited since, an investor will assured of constant returns on capital employed die to the fact that the business is a going concern as depict by the above ratio analysis (Finlay 2000). The business should as well ensure that it has an efficient debts and creditors management in order to ensure that it has an effective working capital that will be able to finance the daily operations of the business Process reflection Difficult issues encountered I must admit that it was not an easy task with case studies at the start of the research since. I believed that they were very long to read and understand the company situation. Nevertheless, one a conceptualized that case studies chiefly entailed a real life business situation that I may encounter in my future career, I start to take it positive my attitude towards case studies on strategic management as well as commenced on approaching the case studies more critically as well as even found then motivating. I as well realized that understanding organization structure as well as its mission and vision statement was significant for strategic analysis formulation since, this are the backboard of any business in terms of strategic planning. it was challenging to change the financial data for the company into an understate in formation since, the financial analysis just entailed assessment of internal factors that affect the business operation devoid of considering other external factors that might impact the result of analysis as well as the conclusion reached in terms of future business operations (Furrer 2010). Key learning on strategic management From the just concluded strategy analysis for Australia post, there a number of things that I would to pit across as what I expired at the time of doing research. First, a realized that business strategy is a game, I learned that a significant procedure for business to establish its anticipated business path is to set out the strategic as well as realistic planning concerning what is the organization objectives that it must achieve as well as the manner to which the objectives among the competition. Concerning the Management Functions In a business, I realized that management must determine the correct as well as vital functions which will run the business operation, define what are the duties of every divisions as well as guarantee that every function performance is in conformity with business goals’ realized that in order to earn more profit, the business must set price strategy to be higher or low in comparison with market price but concludes on the price, the business must take into consideration other features like the expose, the quality as well as resources required in development of the product or services. Concerning the team spirit I realized that team spirit is a key to establishing a precise designation relating to who will act as a leader as well as the followers. Since, with no apparent directions, significantly will lead to resource going in the wrong direction and thus a wastage which may affect business operation in terms of profits. I came to realize that as a leader, one must portray the capability to control as well as train the whole team to do their job (C Appa Rao 2009). Other reflection on process The old objectives for verdict making such as SWOT And PEST analysis took the new implication when depicting from the point of view worldwide business. To be precise. Substantial amount of aspect require to be considered in Worldwide SWOT as well as PESTEL assessment than the old approach. Furthermore, entire of the teaching material were detailed as well as informational was touch during class work to undertake a strategic analysis for any business by referring to real situation case studies in a worldwide business opportunities. Furthermore, I was shock to realize that the old approach to strategic management is intricate when trying to execute in a worldwide business setting (Dave Williamson 2013). 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Ungson, ‎-YW 2009, Global Strategic Management, Springer, Sydney. Henry, A 2011, Understanding Strategic Management - Page 6, Jonh Wiley & Son's, Londion. Hiriyappa, B 2013, Strategic Management and Business Policy, New York. Jeffrey Harrison, ‎SJ 2015, Foundations in Strategic Management - Page 5, Cingage Learning, New york. John L. Thompson, ‎M 2010, Strategic Management: Awareness & Change, springer, Sydney. Michael Hitt, ‎DI‎H 2006, Strategic Management: Concepts and Cases, New York. Michael Hitt, ‎DI‎H 2008, Strategic Management: Competitiveness and Globalization,., Sydney. Paul N. Finlay 2008, Fundamentals of Strategic Management' 2007 Ed. - Page 94, London. Post, A 2015, '2013/14 Annual Report - Australia Post', http://auspost.com.au/about-us/publications.html. Sekhar, GVS 2009, Business Policy and Strategic Management, Jonh Wiley & Son's, London. Steve Brown, ‎B‎L 2013, Strategic Operations Management - Page 423, New York. Stringham, S 2012, Strategic Leadership and Strategic Management: Leading, Springer, Sydney. TOMOHISA　FUJII 2014, ESSENTIAL OF STRATEGIC MANAGEMENT THEORY, Cingage learning, New York. Read More