Telstra Tower Foreign Direct Investment in India and New Zealand

Topics: Investment, Economics, Macroeconomics Pages: 15 (4300 words) Published: September 12, 2010
Table of Content
1. Introduction1
2. Telstra Internal1
3.1 Introduction2
3.2 External factors3
3.2.1 Political3
3.2.2 Economic and Business Environment4
3.2.3 Culture4
3.2.4 Production, market and industry5
3.3 Entry mode for India5
4. New Zealand7
4.1 External factors7
4.1.1 Political8
4.1.2 Cultural8
4.1.3 Economic8
4.1.4 Technology8
4.1.5 Industry9
4.2 Entry mode for New Zealand9
4.2.1 Foreign Direct Investment9
4.2.2 Exporting10
4.2.3 Licensing11
5. Conclusion12
5.1 New Zealand12
5.2 India13

1. Introduction

International business is becoming common around the world. Companies can gain access to areas of high growth allowing them to substantially boost their profits. Telstra Corporation is one such company that has reaped the benefits of investing in international markets. Through investing overseas, they have been able to not only boost revenues but also maintain a competitive advantage over local companies and improve demand for their products and services. This paper will analyse the business environment in New Zealand and India and examine how it might benefit or hinder the growth of Telstra if they were to invest in either of these markets. Our paper will focus on both internal and external factors. For internal factors, we will examine Telstra’s mission, objective and strategies. For the external factors we will consider such things as culture, politics, government regulations, economic, technology and industry. Each factor will determine the suitability of that country for Telstra to invest in. In the second part of the paper will discuss which entry mode is suitable for Telstra to apply in New Zealand, exporting and India. Three entry modes will be considered; Foreign Direct Investment, Exporting and Licensing. Each of these will have a varying impact on Telstra. Finally, a final decision will be made about where the optimal investment opportunity lies for Telstra.

2. Telstra Internal

Telstra is one of the best-known brands in Australia, they provide the most efficient telecommunications services within the country. They offer a full range of services and compete in all areas of telecommunications both domestically and internationally. Telstra is divided into 4 strategic units, Domestic Retail, Telstra Wholesale, Telstra International and Infrastructure Services.

Telstra’s future strategic direction is to further improve its position as the leading telecommunications and information services company in Australia, and to expand its presence internationally. Telstra understands that in order to stay competitive with emerging companies in foreign markets they need to focus on developing a wider range of products for all markets. In addition to this, Telstra has begun to develop its international presence especially in the Asia-Pacific region in order to increase their revenues; acquire additional infrastructure; reduce their exposure to any down turn in the Australian market; and also to minimize the competitive risks.

As Telstra is a multinational company, they have a competitive advantage in providing global sales and professional technical advice. They take a decentralized approach to staffing in order to allow their managers to develop specific knowledge about the countries in which they operate. Telstra also operate their global businesses separately, by doing so they are able to expand their range of products to develop new and innovative products for their specific markets and reduce production costs.

When investing in new markets, Telstra has tended to focus on economies that are experiencing rapid growth to deliver the largest source of profit for the company. For example, in 2001, Telstra took a 60% control of Regional Wireless Company Ltd, which is a company owned by the leading telecommunication business CSL Ltd in Hong Kong. At the time, this investment represented an...
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