Telecommunications Services of Trinidad and Tobago Company Limited (TSTT) was historically, the single provider of telecommunications services in Trinidad and Tobago and therefore the company had a utilitarian approach (Milton Friedman) to CSR, until the mid 1990's when, pursuant to a World Trade Organisation Agreement in 1997 on Basic Telecommunications. The agreement resulted in the entry of several competitors in the telecommunications market, thereby ending the monopoly of TSTT, the state owned incumbent operator.
1.2 PEST Analysis
TSTT's PEST analysis focuses on the following factors, Political, Economic, Social and Technological scan of the macro-environment in which the organisation operates. The political environment as it presently relates to TSTT is one of uncertainty. This has been mainly as a result of the change in government of Trinidad and Tobago on 24 May 2010 the board of directors resigned since they were politically appointed and to date no board has been appointed.
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Economically the liberalisation of the market has resulted in TSTT loosing part its customer base to its competitor resulting in a decrease in the company's profit margins in 2005-2006 of TT$122m. TSTT has been a socially responsible organisation both externally and internally to the organisation, sponsoring local sporting activities and teams, TSTT has been and still is the main sponsor for the "Soca Warriors" Trinidad and Tobago's national football team. Further details of the company's social programmes would be elucidated in this assignment. Through the use of innovation, research and development TSTT has been able to develop new technologies such as Internet Protocol Television and BLINK Vigilance which would allow it to maintain its competitive advantage in the face of competition.
1.3 S.W.O.T. Analysis
The strength of the Company is reflected in the leadership skills and managerial acumen of the executive team who ensured that the Company retained significant market share since the liberalisation of the sector.Â Management of TSTT have become more strategic in their thinking and in the of way developing new and innovative technology. One of the major weaknesses which have been identified at TSTT is its poor network infrastructure and aged plant which has occasionally resulted in the delivery of poor customer service to its subscribers in many instances customers are made to wait for as long as a year to have their phones repaired especially if it is cable related.
TSTT has sought to capitalize on by its foray (opportunity) into the entertainment sector through the provision of IPTV, a new service which it now provides in selected areas in Trinidad. One of the most significant threats faced by TSTT was that provided by its competitors in the mobile services market as a result of the deregulation of the telecommunications sector in 2006.
1.4 TSTT's Drivers for Strategic Change
The breaking of the company's monopoly resulted in Digicel (mobile competitor) being introduced into the telecommunications market. Digicel aggressively implemented CSR utilising both the stewardship and charitable principles, this resulted in greater customer buy-in to their products. TSTT stated to loss customers as the public viewed Digicel as a responsible company. To be competitive and maintain market share TSTT had to keep-up with Digicel and whatever CSR strategies the competitior were implementing to capture what was once their market.
The competitive nature of the market resulted in the introduction of newer and more innovative technology available at competitive prices. Therefore, in the first year of competition the extent of the threat posed to TSTT by its main competitor is reflected in the Company's financial results in the immediate aftermath of Digicel's entry into the market. In the financial year 2006 to 2007, TSTT suffered a financial loss of TT $122 M as compared to the financial year 2005 to 2006 where it made a profit of $261 million.
What is Corporate Social Responsibility (CSR)?
Johnson et al (2008, p146) states that: "CSR is concerned with the ways in which an organisation exceeds its minimum obligations to stakeholders specified through regulation."
The CSR of any organisation encompasses and are developed from the corporate and business strategies which the organisation implements to achieve its vision and mission, which can benefit their stakeholders. The stakeholders are their employees, customers, environment (community), shareholders, government, competitors and suppliers. CSR is a strategy of giving back to those who have contributed to the success of the organisation. It also involves organisations being accountable and responsible in their business undertakings to ensure that a duty of care is exercised in their dealings with stakeholders.
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Corporations in the process of satisfying their vision and mission must be willing to deny profit maximization strategies if their business activities would result in or inflict physical harm to their stakeholders and environmental destruction. Effective CSR requires that a common ground is reached by organisations, which ensures that there is a balance between the benefits to be achieved and the cost both negative and positive to their stakeholders. Maintaining good corporate social responsibility does not mean that organisations must forgo their goals and objectives.
(Daft 2010,p139) states that:
"A stakeholder is any group within or outside the organisation that has a stake in the organisation's performance. Each stakeholder has a different criterion of responsiveness because it has a different interest in the organisation."
Stakeholders of TSTT
Authority of TT
Competitors:- FLOW, LISA,DIGICEL
TSTT through its actions have adopted both the "Charity Principle" as can be seen from the under mentioned examples which illustrates how the company has been charitable towards those less privileged. The company through the Andrew Carnegie's "Stewardship Principle" has also supported the interest of the general public of Trinidad and Tobago.
Those involved in corporate governance have an ethical obligation to do right by the company's shareholders. This obligation is their fiduciary responsibility and challenges them to act in the best interests of their stakeholders, by making business decisions that benefit the organisation instead of ones that benefit them personally.
Leaders are held responsible and are accountable for the performance of the organisation which they manage. Their operations must be concentrated, focused and limited because the community is their responsibility. (Drucker, 2010)
Daft (2010, p143) states that:
"Discretionary responsibility is purely voluntary and is guided by a company's desire to make social contributions not mandated by economics, law, or ethics. Discretionary activities include generous philanthropic contributions that offer no pay-back to the company and are not expected."
Corporate Social Responsibility Strategy at TSTT
The power and interest of stakeholders can be strong enough to influence the direction which the company venture into while fulfilling its CSR. Organisations owes a duty of care to ensure that its management makes decisions and take actions which will enhance the welfare and interests of society while simultaneously strengthening the image and brand of the company's products.
Being a shaper of society TSTT has been able to partner with other organisations as they seek to reshape society by endeavoring to improve the quality of life of their stakeholders in the immediate and long-term. Being a large organisation employing over 2700 employees and a customer base in mobile services at over one million it is expected that there would be conflicting expectations as to what their stakeholder expects them to deliver. TSTT has therefore developed strategies which have allowed them to captured and satisfy the expectations of a wide demographic of stakeholders, through its development of the TSTT Foundation which is responsible for various social and charitable programmes.
4.1 - Good-Vibrations
In its continued commitment to support youth education and culture, the company was one of the co-sponsors of the "Coca-cola Good Vibrations Tour". This initiative was created through the collaborative efforts of OBM Concepts, Coca-Cola and Synergy TV. At these events top local soca artistes would perform at various secondary and junior secondary schools. This venture has benefited TSTT as it encouraged greater public trust in the company, allowing for increased "buy-in" to the company's goods and services.
4.2 - Reality Check
There are also lecture sessions called "Reality Check" where the artistes share their experiences and knowledge on topics such as "The Value of a Solid Education" or "The Realities of HIV and AIDS". The project has been useful in educating the young people of the need to practice safe sex, abstinence, the value of education in shaping their future and the long-term negative effect of drug use on their future. As a result this has allowed the company to captured and penetrate new and younger market segments.
4.3 - Youth Training Centre
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The company has also fully equipped a brand new computer lab for the Youth Training Centre, through its donation of thirty computers to the Trinidad and Tobago Prisons Service. The facility is to be used to help train inmates in various educational and computer literacy skills. It is hoped that inmates would be able to turn away from their life of crime and be positive contributors of society. By focusing on its CSR, TSTT has been able to maintain customer loyalty to the product offerings.
4.4 -Social Programmes
A free live-in camp was hosted by the TSTT Foundation and Diabetes Association of Trinidad and Tobago DATT, during the camp, the children involved in the program learnt how to administer insulin, use glucose, monitors and to choose an appropriate diet - essential skills for maintaining good health by making serious lifestyle changes. Additionally, the participants are also engaged and are involved in regular and fun camp activities such as storytelling, sports and field trips. This can lead to better management of health issues though proper education and knowledge on how to efficiently and effectively control the disease though medication and greater monitored physical activities. TSTT's investment in CSR has allowed the company to strengthen its market position, as a result the company was able to enter new markets with their new products such as IPTV and Blink Vigilance and have competitive advantage. Customers are loyal to the company's brand because the company has invested in social initiatives which have improved their lives.
By concentrating on results TSTT has been able to increase their strengths by leading beyond borders in order to meet and fullfil the requirements of their stakeholders, ultimately serving the good and satisfaction of society. (Drucker, 2010)
The company's partnership with the T&T Chamber of Industry and Commerce to enhance and expand the Neighbourhood Crime Watch Programme, which is spearheaded by the Chamber's Crime and Justice Committee. This initiative involves setting up informational booths, funding educational community booklets and providing other essential tools. CSR have benefitted TSTT's good relationships with local authorities which has made doing business easier. TSTT's CSR strategy is based on partnering with others and confirms John S. Mcclenahen philosophy that social responsibility doesn't happen in isolation.
On February 19, 2011, the Government of T&T official enforced the Motor Vehicle and Road Traffic (Mobile Devices) Regulations 2010 making the use of mobile phone while driving, once a hand free device is not used illegal, therefore punishable by law. TSTT launched a campaign to provide all mobile customers with free, hands-free mobile devices to allow compliance to the law and the protection of their stakeholders while on the road. The company has also advertised and promoted a safe driving culture to avoid and reduce the number of road accidents and fatalities. By improving their CSR, the company has been able to revitalise its product offering even when faced with fierce competition.
Due to extensive media scrutiny and competition TSTT has been able to exhibit high social and ethical responsibility. They recognised the need to make profits must be balanced by fair trade, sustainability, corporate social responsibility and other ethical principles in order for their brand to survive. The image of the company is created whenever and wherever any employee interact with a customer or potential customer helping to shape and maintain a positive image for the company. These activities are the company's strategies of involving the local community and ideal opportunities to generate positive press coverage which can help boost company image.
(Porter et al, 2007) stated that: "CSR can solve social ills and give the company a competitive edge once it is approached strategically".
In the field of culture TSTT has been one of the major sponsors of the top competitions, shows and fetes over the carnival season. Among the major events sponsored by TSTT includes the International Soca Monarch and the Caribbean Brass Festival.
Locally, culture is an enormous part of what drives this country, TSTT's involvement further encourages customer loyalty, buy-in to the company's products, customers feel a sense of connection with the company international and locally.
Benefits of CSR for TSTT
Companies who practices and implement measures that protect the health and rights of their workers, suppliers and all other stakeholder by doing so are also able to protect their reputation, brand name, image and goodwill. Failing to do so can only subject the organisation to investigation, litigation, prosecution, government regulation and enactment of legislation for the protection of society. (Levin, 2008)
As can be proven by the work of Elain Cohen TSTT have been able to partner with its Human Resources and Corporate Social Responsibility, through its recruitment, compensation, training, employee communications, employee well-being, health and safety, employee rights, involvement in the community and employee impacts on the environment are all discussed from the CSR-HR perspective. Their HR functions play a vital role of embedding a value-based, strategic CSR mind-set and establishing an organisational culture that meets the needs of their stakeholders.
As a result of CSR they have been strategically poised to fend off competition and this have enabled the company to maintain its market share while simultaneously capturing new markets through the development of new products such as IPTV and Blink Vigilance additional to its existing product offerings. Corporate Responsibility offers more effective management of risk helping companies to reduce avoidable losses by identify new emerging issues and use positions of leadership as a means to gain competitive advantage by influencing new regulation to strengthen competitive advantage.
6.1 Customer loyalty
Focusing on CSR has allowed the fostering of loyalty from customers to the company's band, further strengthening its image, resulting in increased sales and ultimately profitability. Though competition has entered the market TSTT did not lose its share of the market. The company's CSR initiatives have made them more competitive therefore the risk of sudden damage to their reputation and sales was reduced.
6.2 Quality of Life
Having engaged and partnered with their stakeholders TSTT have been able to improve their quality of life, this have allowed customers to buy-in to the company's band. Employees are better motivated, satisfied and more productive as the company's management is committed to ensuring that their needs are completely satisfied and this leads to increased productivity and efficiency.
6.3 Company Reputation
TSTT's reputation as a good corporate citizen makes it an employer of choice, employees remain employed longer, therefore the cost of disruption when employees leave the organisation is reduced. TSTT's success has been dependent upon its relationship with its stakeholders, especially customers. Enhancing their relationship with stakeholders has increased the potential support that each group has for the company and its strategic objectives. Employees stay longer reducing the costs and disruption, building a reputation as a responsible business sets them apart.
TSTT's gap in CSR
However, the company can do more in terms of the "stewardship principle" to enhance its corporate image, especially in relations to the rates which are charged to their customers. As a monopoly TSTT billed both customers making and receiving mobile calls. Also units were not allowed to roll-over into the following month. With the liberalisation of the Telecommunications market, the company reduced its local call rates to its customers in order to remain more competitive. CSR according to Robert Ackerman focuses on how companies respond to issues rather than focusing on their ultimate social responsibility.
TSTT has however, failed to pass the benefits of its high profits on to their employees both junior and senior staff. Employees for the past nine years have been paid 2002 salaries though the cost of living in a global recessionary market has continued to increase. The erection of cellular towers in densely populated locations resulted in protest action from residence as there is a risk factor of cancer involved. (Trinidad Newsday, 2006)
(Nash & Wellington, 2007) stated that:
"Investors already are discounting share prices of companies poorly positioned to compete in a warming world. Many businesses face higher raw material and energy costs as governments around the globe increasingly enact policies placing a cost on emissions. Consumers are taking into account a company's environmental record when making purchasing decisions."
Obstacles faced by TSTT implementing CSR
To implement effective CSR strategies in a competitive environment requires a substantial fanancial investment. The company faced the challenge of having to invest a substantial amount of their profits in CSR as they strive to protect their market from the competition, hence the possible reason employees did not receive an increase in salary for nine years.
The company also faced resistance from employees to the aggressive on-slaught of CSR by the company, many employees felt that they were neglected by their employer. One employee was most dissatisfied during carnival 2007 when the company invested heavily in local events, even sponsoring and giving away t-shirts etc. However, the company did not give employees any carnival t-shirts as they are accustomed too.
Setting high ethical standards makes economic sense. There are evidence (Enron, Hindu Credit Union) showing that as corporations place greater emphasise on ethics, the organisation would be better able to positively influence the company's bottom-line.
Acting in an ethical manner is the socially responsible thing to do and developing a code of conduct can set-up a framework for ethical behaviour. Corporations do not exist in isolation; they interact and greatly affect the world outside.
It is strategically beneficial that organisations incorporate socially responsible goals in their corporate mission and vision. CSR is all about changing the lives of the organisation's stakeholders for the better. Ethical corporate behaviour and practices encourage a culture of integrity and brings about positive organisational change which can be reflected in the society as a whole.
(Porter et al, 2007) stated that: "Disclosure of impact will not by itself produce behavioral change, but it will raise questions, open conversations, and prompt legislative sanctions."
Based on observation, the entry of competition in the telecommunications market has witnessed an on-slought of social programmes geared towards improving the quality of life and conditions which are designed towards enhancing the social standing for the country's population. To maintain its market leadership position it is advisable that TSTT further aggressively continue its Corporate Social Programmes as it would further encourage buy-in and loyalty to the company's brand in the face of increased competition. With the impending introduction of a third player about to enter the mobile market this can further deplete TSTT market base therefore, what would distinguish and set TSTT apart from their competitors are their corporate social strategies which can encourage customer buy-in and loyalty for the company's goods and services.
It is advisable that TSTT's management have the support of its workforce as they are the drivers and implementers of the company's CSR strategies. The employees are the drivers for change and are able to influence other stakeholders to buy-in to the company's CSR initiatives. TSTT must now venture into new and innovative CSR strategies which would allow the company to maintain market leadership and also capture new markets to encourage customers to remain committed to the company and its offerings. The leadership must now develop more creative strategies which can manifest the "stewardship and charitable principles" of good CSR.