Académique Documents
Professionnel Documents
Culture Documents
Introduction
Australia Post has the legislative monopoly to deliver bulk mail. 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)
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 parcels and logistics
business was split from letters to identify the growing nature of this area moving into the future,
the technological and warehousing function and finally the opportunities for acquisitions and
strategic partnerships that have been developed. These will be discussed further in the analysis
section of the report.
The move from just supplying postal services from the shop front to agency services and retail
products recognized Australia Post’s vast national network, representing 4,433 outlets. This is
the largest retail network in Australia. Australia Post is also in a unique situation of being able to
provide government, banking and other services across the vast distances of Australia with its
2,541 stores in rural and remote areas. Australia Post serves approximately 1,000,000 customers
every business day. (www.afrbiz.com.au, 2009)
Market Analysis
Although Australia Post has a monopoly domestically in most of its business units, it is still
greatly affected by the wider community in Australia and overseas as well as major trends in
transporting goods and delivering services. To gain insights into these externalities and its
internal strengths and weaknesses, this report will use Nine Forces Industry Analysis and a
SWOT Analysis. The benefit of using this form of strategic analysis is to combine the two major
externalities faced by Australia Post. That is the macro-environment and industry analysis. 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, 1980), a holistic framework
is used to gain insights into the externalities affecting Australia Post. Set out below are the nine
forces, commencing with the PEST analysis.
Political/Legal
The letters business is regulated by several pieces of legislation. The Department of Broadband
Communications and the Digital Economy oversees the legislation and policy development to
best meet the Australian publics social and economic needs. The Australia postal market is
deregulated and complies with the Australian Postal Corporation Act 1989 (APC Act).
(Department of Broadband, Communications and the Digital Economy Web Site, 2010)
All areas of Australia Post must comply with the Trade Practices Act 1974.
Economic
Across its three core business units, Australia Post operates as a monopoly is some areas and
competes in other highly competitive domestic and international businesses. Its letter business is
monopolistic, however the logistic/parcel business and agency services compete with major
international organisations. 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.
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, the net profit
declined by 35.7%. There was still a pre-tax net profit of $380.9 million from a record high of
$592.2 million. This is opposed to most international postal companies which reported major
losses over the same period. 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. The business unit effected most was parcels and logistics as this serves the business-to-
business and business-to-consumer markets.
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, insurance and utilities
payment needs which Australia Post offers. This is represented by the fact that agency services
and retail was the best performing business unit in 2008-09, with a revenue growth of 3.2%.As
Australia continues to be a globalised economy with many of its population born overseas or a
wide heritage, parcel and logistics is a growing area. Australia based letter movements did drop
from a high of 5.2 billion to 4.9 billion this year.
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. The move to electronic
information from traditional letters has an ongoing downward effect on its traditional business.
However the growth in online business has lead to the growth in more packages needed to be
delivered individually from sellers to buyers homes. Australia Post has been able to meet this
demand. Technology has also allowed the Australia Post network to offer a range of business and
financial services through its 4,433 shop fronts. In 2008-09 capital expenditure was $270.1
million. The majority of this was on the SAP enterprise system and other systems including HR
and point of sale. This is to facilitate new product offerings, improve logistic movements and
timeliness to produce a customer focused corporation.
Strengths
Australia Post’s strengths is not only its monopoly in letters, strong brand with the Australia
public, but also management strategic thinking and positioning of the business units to meet
future challenges. Australia Post has developed strong links in the Asia Pacific region to provide
an integrated logistics solution to its clients. The partnership between Australia Post and China
Post to provide end-to-end supply chain to manage cross-border business functions. This allows
delivery from warehouse direct to customers from Australia’s largest import/export partner
China (James, 2007). Australia Post is the third largest importer of goods to Australia.
Weaknesses
Having a legislative obligation to provide letter services may cost Australia Post in the future if it
becomes unviable. Australia Post has also over extended itself in an attempt to provide agency
services. In 2006 it put many resources into selling Jetstar tickets, but ended up withdrawing
after it realized it would have to be exempt from travel agent licensing requirements. Over
extending on agency services may be a weakness.
Opportunities
There are also opportunities in agency services using the Australia Post network, if managed
correctly with an adequate fit. This is evident in its move into general insurance. This may be
risky as a report by UBS consultancy found that customers are unwilling to leave existing
established financial companies (James, 2009). Moves into car insurance are another opportunity
to compliment existing over-the-counter banking, international money transfer, bill payments,
and identity checking (Sibillin, 2009).
Threats
The external threat in letters is from the social trend of the lowering of use of paper letters. This
is evident in international trends over recent years. Australia Post recognize this is only viable
with an increase in basic postage rate, which may put the cost of letters out of the market.
Another threat is the move form an international player in the complete end to end logistics
market that is offered by Post Logistics.
Letters distribution will have to cost management will have to be monitored closely as the
numbers of items drop to an uneconomic level. Especially as there is a legislative obligation to
deliver mail to all parts of Australia. 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. By
using the technology and distribution networks, including the private carriers, then letters can
continue to make a profit.
As mentioned earlier, the most competitive but the business unit where there is the most potential
is in Parcels and Logistics. By using integrated supply chain techniques, that is not only
transporting but managing the whole delivery process for commercial customers, Australia Post
will be so entwined in the delivery of goods that the switching cost will make it prohibitive. This
is particularly the case with e-commerce as goods are ordered online and Australia Post is
notified immediately to meet this order. There is also warehousing revenue from its Chinese
strategic partners.
Agency services and retail outlet also offers opportunities to grow, in particular in the regional
areas. A greater banking presence could be offered in the rural and remote areas to take over
traditional banking companies. This may also include lending, mortgage, 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.
References
Airline Business (2006), Competition Heats Up Cargo Market. Airline Business; Sep2006, Vol.
22 Issue 9, p30-30.
James, D (2009) No Premium In The Post. BRW; Vol. 31 Issue 36, p13-13.