Telstra Makes the Wrong Call? Case Study

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And that is not a favorable climate for Telstra to maintain its freedom to operate how it chooses to; its independence and sovereignty is in question as its very business model.

Having begun as a classically bureaucratic, public-service organization, Telstra's organizational structure is going to be very difficult to change. Yet to placate and create a productive collaborative working relationship with government regulators, Telstra needs to consider a decentralized organizational structure. The proposed structure needs to move beyond simply defining and creating functional boundaries between departments; it must re-align the company to concentrate on how Telstra can be better aligned to disruptive innovations occurring in mobility, cloud computing, device convergence including the use of tablets for consuming streaming video content. It can be inferred from the case that the Australian government is considering moving towards a decentralized structure for Telstra given the claims of its monopolistic competition vs. Optus, and the lack of effective investments to support and service fixed-line, mobile services and mobile Internet customers.

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Telstra must take the initiative to create a decentralized organizational structure to avert the government taking action. Redefining the organizational structure of Telstra to better align with disruptive factors occurring in mobile will further increase the potential of long-term profitable growth as well.

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Conclusion

With the precedent set of a government that sees the value of continued privatization for telecommunications while paradoxically believing in the value of deregulation, Telstra's independence is slowly slipping away in the time period of the case study. For the company to retain its independence, it must consider a decentralized organizational structure, one that will infuse investment ownership throughout the divisions created. Telstra, in its current structure, will most likely be broken apart by the government over time. Telstra's management team needs to take the initiative and create a highly decentralized, market-driven organizational structure to compete and reduce the impact of government regulators in the short-term and legal & political factors over the long-run......

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