Optus-Market Analysis Online Tutoring

Executive Summary

We live in an integrated environment with technical needs that are evolving quickly. Connectivity promises to change how we live, work, and perform and to meet new requirements for suppliers and service providers. The increasing usage of Australians requires organizations to be agile to build their strategies surrounding the marketing situation and segmentation. In 2001, Optus was purchased by Singapore government-owned Singapore Telecommunications Limited (SingTel). Optus is an advanced connectivity platform, providing a wide range of telephone, local, regional and international long-distance, enterprise network, email, cable and TV networks, and payment services. The focus of this report is to focus on the mobile and telephony service to reflect on the market situational analysis by using the SWOT framework and Porters five forces framework and segmentation of the market is based on business to business and business to consumers which have further micro-segmentation followed by the recommendations for the chosen target market.

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Introduction

Initiated in the year 1991 Singtel Optus Pty Ltd is the second-largest telecommunications company of Australia that comes under the shell of Singapore Telecommunications Limited and it operates under the brand name Optus. Primarily the core business of Optus is a telecommunications service provider, providing a wide range of communication services like mobile services, telephone, business network services, internet, satellite services, and subscription television. The company focuses on both business consumers as well as individual consumers which account for 10.3 million mobile customers and 1.2 million broadband customers (Singtel 2019).

Market Situation Analysis

This section of the report will analyze the market by SWOT and Porters’ Five Forces Model.

SWOT Analysis

The framework has been providing the strengths and weakness of the organization and scans them against the opportunities and threats of the business environment to develop effective strategies (Ghazinoory, Abdi, and Azadegan-Mehr 2011). The major strengths are network coverage, parent company, revenue, and sustainable operation. The only weakness is the low diversification globally, with opportunities being 5G, strategic partnerships, and global network market. The major threats are intense competition, rapid technological changes, and stringent regulations.

Strengths

Network Coverage: For the company providing mobile and telephony services network coverage proves to be the most significant competitive advantage (Shafei and Tabaa 2016). Optus has been serving around 10.3 million customers and covers around 94% of the Australian population, this wide range of network coverage provides the company with an edge over its competitors.
The Parent Company: The parent company of Optus is the Singapore Telecommunications limited which is the leading communication technology group in Asia, with over 690 million customers worldwide and presence in 21 countries (Singtel 2019), the strong group backing and experience of the management and stakeholders is a sustainable competitive advantage for the company.
Revenue: In the fiscal year of 2019 Optus recorded revenue of 9.099 billion revenue in comparison to 8.612 billion revenue in the fiscal year 2018 (Singtel 2019) this growth of 5.65% is beyond the industry average for the year (ACCC 2019). This shows the company is growing beyond its competitors where the industry has fierce competition this is a strength for the company.
Sustainable Operations: The company is committed to reducing the ecological footprint, the introduction of Mobile Muster has been a step forward in developing sustainable operation (Singtel 2019).

Weakness

Diversification Region: The origins and parent company is less diversified in terms of region, the main focused region is Asia, whereas the other competitors are more diversified, the business operations in a single region makes it vulnerable to the economic and market conditions.

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Opportunities

5G: At the moment 5G is at the corner and the company invests in 5G for technology management. The 4G to 5G transition will serve consumers as well as various industries. With the expected eight-fold increase of global mobile data traffic by the end of 2023 (Deloitte 2019), more effective technology, higher data rates, and increased spectrum use are needed. And the opportunity to do so, 5G can provide individuals, culture and industry, and new opportunities. 5G adds value: enhanced mobile coverage is the first example for 5G, overcoming competition for increases in traffic and better user experience. In the next few years, the worldwide market for cloud storage services will rise rapidly. The installation of hard-to-use physical servers ensures that complex operational demands are gradually responded to, forcing companies and government departments to turn to the cloud. Cloud computing provides companies with simple and cost-effective options that satisfy their data storage needs. This also offers secure and quick storage for the production of smartphone applications for communications and related businesses. 5G will enable businesses to adapt to cloud technology.
Strategic Partnerships: Focus on Strategic partnerships will enable the company to grow its operations, in the year 2018 the partnership with Vocus group (Dodo, iPrimus, Commander) on its Mobile Virtual Network Operator (MVNO) agreement on the access of 5G technologies and network (Optus 2018). The strategic partnerships with other corporations and technologies are the growing opportunities for Optus.
Global Network Market: Investments in-network services market are driving the growing demand for bandwidth from companies and companies. The majority of Network Services demand should be from Europe followed by Asia-Pacific, North America, Central, and Latin America, and Central and Eastern Europe (Deloitte 2019). Potential exists to tap into global markets and diversify the regional limitations of the brand.

Threats

Intense Competition: In the telecom industry and consumer expectations, the company’s efficiency will be influenced by the competitive climate. Competitive factors influence requests for its services, including the timely production of new affordable goods and the company’s reaction to reduced pricing to maintain demand. In addition to the established players, emerging players also compete hard to achieve the greatest market share in the developing countries (Deloitte 2019). With a broader market experience, improved brand recognition, proven consumer and supplier relationships, and greater support for many of its rivals, competition with them can be challenging for the firm. The competitive position of a company could be affected by factors such as changes in customer order patterns, changes in incentive programmes, or new products for the competitor (ACCC 2019). Competition has continued to expand on its customers, with the demand for mobile telecoms fragmented rapidly from customer acquisition to consumer retention. Entrants and emerging entrants have evolved with reduced cost and flexible, innovative business models.
Rapid Technological Changes: There are many significant technical advances, product creation, and growth in the telecommunications market. The organization must therefore actively develop new products and upgrade existing products and invest in and improve new technologies and products in order to meet its customers ‘ requirements. The launch of innovations and technology requires a significant research and development effort. The company’s earnings will suffer from investment in these innovative innovations if they are not adopted as expected on the market. The organization should constantly launch new products that satisfy consumer requirements and surpass them in order to compete effectively with their partners. The implementation of new technologies or the adoption of new industry standards that make obsolete or unmarketable existing products or products under development.
Stringent Regulations: Optus is subject to many restrictions imposed by Australian regulatory authorities that intervene with its activities. The sector of the firm is subject to the Australian Competition and Consumer Commission (ACCC) regulations (ACCC 2019). Environmental regulations extend to its activities in compliance with both Commonwealth and State law and the provisions of the telecommunications legislation of 1997. Impacts of construction, repair, and operation of power facilities, pollution at the site, and waste disposal are the biggest factors in environmental legislation. The Broadband, Telecommunications, and Digital Economy Division also oversee the enterprise’s sector. Such agencies control duty rates, access rights, licenses, and other company-related market matters. Any unfavorable regulatory and policy changes may affect the company’s activity.

Porters Five Forces

The framework by Porter (1989) analyses the competitiveness of the industry to know the profit potential.

New Entrants – Weak: The wireless market is highly capital-intensive; Mobile telecommunications-related infrastructures are critical for the expansion of wireless services. Through developing rules and regulations on access to delivery platforms, infrastructures, and networks that preclude seller concentration, policymakers dramatically control the height of such barriers. The competition is subject to regional legislation since the telecommunications sector is heavily regulated, which can deter or legally forbid other parties ready to join the industry which makes the new entrants as weak.
Substitutes – Weak: The primary substitute for the mobile wireless technology is the fixed-line phones and VoIP Communication this does not prove to be an effective solution for the industry users which is why it is evaluated as low.
Buyer Power – Moderate: The buyers here are considered individuals and corporations. There is stronger competition on the market with the presence of major competitors that control the market and benefit from economies of scale. Small disparity contributes to profitability in price and quality. The buying power is increased by the existence of large corporate purchasers that have a strong financial position and can adversely influence the profits of a company if they decide to change businesses. In terms of financial power, individual customers may reduce their resources, but the loss of a customer does mean that they lose long-term sales, provided that the cost of transferring prices is marginal. Faithfulness to the company is also low as customers are prone to price.
Supplier Power – Strong: The key suppliers of wireless telecoms are facilities-based networking hardware. Although, in some cases, infrastructures such as towers are provided by private companies. Mobile phone manufacturers are also included in this segment as cell phone handsets are sold free of charge or at heavily subsidized prices by cellular telecommunications providers. The fact that there are very few manufacturers of this hardware increases supplier control.
Existing Competitors – Strong: There is stronger competition on the market with the presence of major competitors that control the market and benefit from economies of scale. Small disparity contributes to profitability in price and quality. Only the amount of companies that can happily coexist in a small market and yet have the ability to attract new customers and continue to gain will determine the true rivalry level which is assessed as strong rivalry in the industry.

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