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Executive summary
Telstra Corporation Ltd (Telstra or the company) is a leader in Australian telecommunication and information industry that provides a range of communications services for both domestic and international customers. As stated in their annual report (2014), their mission is “to create a brilliant connected future for everyone”. With the exploitation of various sources and value chain analysis, this report examines Telstra’s current position in the Australian mobile service market and formulates the recommendation that Telstra should attempt to cut the cost of its mobile service to maintain its leadership in the market.
Proposals of how to achieve this goal is also included in this report.

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Table of Contents
Executive summary........................................................................................ 2
Table of Contents ........................................................................................... 3
1. Introduction ............................................................................................ 4
2. Value Chain Analysis ............................................................................. 5
2.1. R&D ................................................................................................ 5
2.2. Marketing ........................................................................................ 5
2.3. Delivery ........................................................................................... 5
2.4. Customer Service ............................................................................ 6
3. Costing Method ...................................................................................... 7
4. Difficulties in measuring costs ............................................................... 8
4.1. Service Costs ................................................................................... 8
4.2. Depreciation Costs .......................................................................... 8
5. Trends & Recommendations .................................................................. 9
References .................................................................................................... 10

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1. Introduction
Currently, Telstra provides mobile services, fixed voice services and fixed data services in Australia (Telstra 2014). Among all these, mobile service is of vital importance to the company’s success in the market. Understanding customers’ needs of using simple and easy technology, the company has built the largest and most reliable mobile network nationally in Australia (Telstra Annual Report 2014).
In the 2014 financial year, it has 937,000 of new domestic retail mobile customers and now offers 16 million mobile services domestically (Telstra Annual Report
2014).
According to Telstra Annual Report (2014), it puts emphasis on three aspects strategically, namely boosting customer advocacy, gaining value from the core business and establishing new growth businesses. To align with its strategies,
Telstra seems at pains to provide outstanding mobile services for not only customers in cities but also for those who live in remote areas, from which build itself reputation and strength (Telstra Annual Report 2014). In 2014 financial year, it continued to invest $1.1 billion in mobile network to maintain its leadership in network and to develop new business, which significantly enhance its coverage area of 3G and 4G networks (Telstra Annual Report 2014).
For the sake of value chain analysis, understanding the relevant cost information and all resources involved in Telstra’s mobile services is crucial. Direct costs that could be traced individually and indirect costs that could be identified to allocate are critical in analysing the company’s value chain. Direct costs include direct labour cost and direct material cost that could be traced to fundraising activities
(Bhimani, Horngren, Datar & Rajan 2012).