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Recognising challenges and opportunities ahead, Australia Post has moved away from its traditional business of mail deliver to recognize it is more broadly in the logistics industry. Contrary to general the belief, the number of letters sent in Australia is increasing. Personal letters have fallen, however as this only accounts for 5% of all mailing the increase in commercial and bulk mailing has more than made up for this. Accordingly it has developed technological, supply chain and transport assets to meet the needs of this industry. In a difficult economic climate Australia Post still manages a net profit for 2008-2009, but further challenges lie ahead. Using the Nine Forces Industry Analysis and the SWOT analysis tools, this paper will examine the unique position that Australia Post finds itself. The paper will conclude by evaluate recommendations and opportunities over the next five to ten years. Product Range Australia Post is organized into three core business unit. This is diagrammatically shown in Appendix A. These are: • • • Parcels and Logistics Letters Agency Services and Retail Products
To give an indication how Australia Post has moved away from its traditional business, over the last five years the parcels and logistics business has outperformed the letters business, not in volume but in terms of contribution to net profit. In the 2007/08 financial year parcel and logistics net profit was $246.4m, letters business was $148.5m, with agency services and retail products contributing $86.5m net profit (Aust Post Financial Report, 2008-09). Australia Post represents one of the largest employers in Australia at 35,509 employees across all business units. As a major employer in regional area, government policy of giving employment opportunities to indigenous Australians can be met with over 4,000 employed within Australia Post. (Aust Post Financial Report, 2008-09)
433 outlets. representing 4. This is the largest retail network in Australia. Set out below are the nine forces. (www. commencing with the PEST analysis. a holistic framework is used to gain insights into the externalities affecting Australia Post.000. That is the macro-environment and industry analysis. banking and other services across the vast distances of Australia with its 2. These will be discussed further in the analysis section of the report.afrbiz. 1980). The parcels and logistics business was split from letters to identify the growing nature of this area moving into the future.com. Nine Forces Analysis Political/Legal The letters business is regulated by several pieces of legislation. The benefit of using this form of strategic analysis is to combine the two major externalities faced by Australia Post. Australia Post is also in a unique situation of being able to provide government.The development of the three core business units are tightly integrated using Australia Post’s SAP Enterprise Resource Program software across the entire business. the technological and warehousing function and finally the opportunities for acquisitions and strategic partnerships that have been developed. The Department of Broadband Communications and the Digital Economy oversees the legislation and policy development to . By starting with the PEST analysis looking at the environment in which Australia Post operates and then moving to industry analysis using Porter’s Five Forces (Porter. The move from just supplying postal services from the shop front to agency services and retail products recognized Australia Post’s vast national network. Australia Post serves approximately 1. 2009) Market Analysis Although Australia Post has a monopoly domestically in most of its business units.au. it is still greatly affected by the wider community in Australia and overseas as well as major trends in transporting goods and delivering services.000 customers every business day.541 stores in rural and remote areas. To gain insights into these externalities and its internal strengths and weaknesses. this report will use Nine Forces Industry Analysis and a SWOT Analysis.
. however the logistic/parcel business and agency services compete with major international organisations. Over the previous decade. Australia Post achieved profit growth year on year. However due to the global financial crisis and a slowing of the Australian economy in 2008-09. This is opposed to most international postal companies which reported major losses over the same period. Social Changes in the demographics of Australia to an aging population has an impact on Australia Post as those less able to travel rely on one central point for their banking. This is represented by the fact that agency services and retail was the best performing business unit in 2008-09. This can be attributed to the fact that Australia’s economy was one of the few OECDs to not go into recession and the diversified nature of the Australia Post business. with a revenue growth of 3. 2010) All areas of Australia Post must comply with the Trade Practices Act 1974.2%. the net profit declined by 35.7%. Australia Post operates as a monopoly is some areas and competes in other highly competitive domestic and international businesses. Economic Across its three core business units. There was still a pre-tax net profit of $380.As Australia continues to be a globalised economy with many of its population born overseas or a wide heritage.9 billion this year.2 million. Communications and the Digital Economy Web Site. The Australia postal market is deregulated and complies with the Australian Postal Corporation Act 1989 (APC Act). insurance and utilities payment needs which Australia Post offers.9 million from a record high of $592. Australia Post needs to be highly strategic as it moves forward as it is these highly competitive business units where its future business and the most growth is to be. Its letter business is monopolistic. parcel and logistics is a growing area.best meet the Australian publics social and economic needs. Australia based letter movements did drop from a high of 5.2 billion to 4. The business unit effected most was parcels and logistics as this serves the business-tobusiness and business-to-consumer markets. (Department of Broadband.
Bargaining Power of Buyers To regulate Australia Post’s monopoly position in the letter market.433 shop fronts. This includes banks and insurance companies that are able to offer agency services to existing and new clients.Technological Continued technological trends and the broader effect technology has socially and economically have a major impact on Australia Post’s business into the future. In the agency services Australia Post is in competition with all major corporations with a broad customer face to face network. The biggest threat is in the parcel and logistics business where major international corporations are able to enter. its demands would need to be met. The majority of this was on the SAP enterprise system and other systems including HR and point of sale. In 2008-09 capital expenditure was $270. Threat of New Entrants Due to the legislative and historic nature of letter delivery in Australia. suppliers of trucks and other transport needs as well as technology providers such as SAP do have bargaining power as a supplier. As parcel and logistics is its most competitive business units. Bargaining Power of Suppliers As a major Australian corporation with a monopoly in some of the markets it operates. Australia Post has been able to meet this demand. To have access to the Australia Post network of shop fronts for retail and agency services. This is to facilitate new product offerings. However the growth in online business has lead to the growth in more packages needed to be delivered individually from sellers to buyers homes. This affects commercial buyers as this makes up 79% of all letters . there is a low threat of new entrants in the letter delivery business. improve logistic movements and timeliness to produce a customer focused corporation. Australia Post’s suppliers have little bargaining power. Technology has also allowed the Australia Post network to offer a range of business and financial services through its 4. price setting of postal delivery is set by the government department overseeing Australia Post with input from the Productivity Commission. The move to electronic information from traditional letters has an ongoing downward effect on its traditional business. Australia Post is a leader in this market.1 million.
DHL or Star Express. Australia Post has developed strong links in the Asia Pacific region to provide an integrated logistics solution to its clients. Australian air Express – increased air freight and international capacity. A growing field is other commercial buyers with direct marketing communications consisting 16% of postal mail (Australia Post Financial Report 2008/09). Threat of substitute products or services The major substitute product is the online communication of information for personal and business correspondence. 2006) Strengths Australia Post’s strengths is not only its monopoly in letters.posted in Australia. 2007). To stay competitive in March 2005. Parcel and logistics buyers have greater power as they can choose from other international corporations such as Federal Express. strong brand with the Australia public. The partnership between Australia Post and China Post to provide end-to-end supply chain to manage cross-border business functions. giving Australia Post reputation and an existing customer base from SWADS clients. Australia Post acquired State Warehousing & Distribution Services (SWADS). Logistics and parcel movement can also be moved by substitute products. (Airline Business. Strategic alliances are also being entered into to cover for logistic deficiencies in Australia Post’s network. but also management strategic thinking and positioning of the business units to meet future challenges. Online payment of bills and delivery of financial. insurance and utilities can also be serviced online. This greatly bolstered the Post Logistics business. . This include with StarTrack Express to cover road freight. This allows delivery from warehouse direct to customers from Australia’s largest import/export partner China (James. Australia Post is the third largest importer of goods to Australia. Rivalry Among Existing Competitors As mentioned the main competition is in the Parcels and Logistics business unit. SWADS – increased business-to-business and business-to-consumer capacity.
Over extending on agency services may be a weakness. This may be risky as a report by UBS consultancy found that customers are unwilling to leave existing established financial companies (James. Australia Post has also over extended itself in an attempt to provide agency services. and identity checking (Sibillin. Australia Post must uphold delivery standards to compete. delivered 99% of Express Post items on time or early.4% of large parcels on time or early. This is evident in international trends over recent years. which may put the cost of letters out of the market. 2009).Weaknesses Having a legislative obligation to provide letter services may cost Australia Post in the future if it becomes unviable. Post eParcel increased business by 13%. Opportunities There are also opportunities in agency services using the Australia Post network. if managed correctly with an adequate fit. For the financial year 2008-09 it has been able to meet the following benchmarks: delivered 96. Threats The external threat in letters is from the social trend of the lowering of use of paper letters. Another threat is the move form an international player in the complete end to end logistics market that is offered by Post Logistics. 2009). Australia Post recognize this is only viable with an increase in basic postage rate. bill payments. . but ended up withdrawing after it realized it would have to be exempt from travel agent licensing requirements. Moves into car insurance are another opportunity to compliment existing over-the-counter banking. international money transfer. This is evident in its move into general insurance. In 2006 it put many resources into selling Jetstar tickets. Changes and Challenges As Australia Post is competing with electronic mail which is delivered instantly and courier companies which are paid a premium to deliver direct to the customer.
By using integrated supply chain techniques. mortgage. This may also include lending. Especially as there is a legislative obligation to deliver mail to all parts of Australia. By using the technology and distribution networks. the most competitive but the business unit where there is the most potential is in Parcels and Logistics. in particular in the regional areas. each of the three business units require unique recommendations moving into the future. Agency services and retail outlet also offers opportunities to grow. including the private carriers. Australia Post will be so entwined in the delivery of goods that the switching cost will make it prohibitive. then letters can continue to make a profit.To meet the challenges ahead. There is also warehousing revenue from its Chinese strategic partners. that is not only transporting but managing the whole delivery process for commercial customers. This is particularly the case with e-commerce as goods are ordered online and Australia Post is notified immediately to meet this order. Letters distribution will have to cost management will have to be monitored closely as the numbers of items drop to an uneconomic level. There is also the challenge of meeting the demands of complete supply chain logistics solutions as provided by Australia Post with the assistance of its strategic partners both in Australia and in particular in China. As mentioned earlier. points to the continued investment in technology to improve efficiency and the customer service and the expansion further into business to business logistics. If higher prices for postage to represent increased costs are able to be achieved through the Productivity Commission and efficiencies in deliver when using the expanded parcels and logistics network then the letters business unit may remain viable. the Managing Director Graham John. . A greater banking presence could be offered in the rural and remote areas to take over traditional banking companies. Recommendations For Next 5 to 10 years Given the analysis and challenges outlined above. savings and other banking services to offer a complete service to the Australian regional clients as the other service providers move away from these geographic areas.
Travel Weekly. Communications and the Digital Economy Web Site . 31 Issue 36. (2010) http://www. 22 September 2006.auspost. BRW. Vol. (viewed 21/2/10) Australia Post Financial Report 2007-08. C (2006). Airline Business. Vol.dbcde.au/page. Competition Heats Up Cargo Market. Australian Government Department of Broadband. p30-30.au/annualreport2009/financial-andstatutory-reports. Sep2006.html.gov.http://www. www. A (2009) Alpha Mail.1467.auspost. BRW.com.CH4646~MO19. Vol. 22 Issue 9.00. D (2007) Special Delivery. Sibillin. 29 Issue 29. James. BRW.References AFR Australia Post Case Study. 31 Issue 36. Issue 19. p68-70. p43-43. .afrbiz.com. p13-13. D (2009) No Premium In The Post. Sweeney.au/BCP/0.asp? 3652=416520&E_Page=416317&3648=416511&case=416519 (Viewed 21/10/10) Airline Business (2006).au/post/policy_and_legislation (viewed 21/2/10) Australia Post Financial Report 2008/09.com. Vol.html. www. (viewed 21/2/10) James.
afrbiz.com.APPENDIX A Diagram From www.au : Australia Post Case Study .
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