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Global Communications is a telecommunications company that conducts its business in a volatile market which is characterized by very complex levels of competition. The Global Communications is a major player of some significance in the Telecommunications Industry. It is a single industry player and it is able reap the benefits of industry fully and it is also vulnerable to challenges/problems when they occur. This problem solution essay will address the issues that the Global Communications faces which includes Global Communications management choices in the redirection of the company, reduced stock value, shrinking market share, communications breakdown and strained labor relations. In addition, this paper will identify areas of opportunity for Global Communications to overcome the issues and regain its position as a leader in the telecommunication industry.
The problem solution
Global Communications is the lifeblood of an organization. The company managers should communicate the vision of the organization from the CEO to all the workers. The company has experienced about a sixty percent decrease in its stock over a period of about three years. The increased competition by cable services are infringing on a territory that was previously the domain of communications industry. Global Communications leadership and management teams should set a successful direction for the company to enhance its survival. Situation Analysis Issue and Opportunity Identification
Global Communications has a changing market place and the leaders need to explore new market. This includes becoming partners with other existing service providers to increase market penetration. The company team also wants to focus on the cost savings. The global arena is highly targeted to make the communication company a truly global competitor. There has been a serious erosion of the traditional customer base from the cable companies who are offering complete solutions for customers. No longer do customers require separate providers for telephone, cable and Internet services. Global Communications Company has to discover a response to stay the erosion of their customer base (Mensah N. 1990).. The act of partnering with other service providers allows Global Communications to vigorously expand its reach without significantly increasing its expenditures on the infrastructure. Hiring many new skilled salespeople will increase market share by increasing the recognition of the company. Off-shoring cannot be able to grant the company the savings they think they will realize because it looks good on paper, but the intangibles such as the inability to understand the person on the other end of the line or the harm to the morals of the employee cannot be overlooked. Many companies spend tens of millions of dollars to set up call centers and offshore their technology centers after which they realize that the savings is less than they projected.
Companies are going to outsourcing as a significant alternative. This will allow the communication company to retain the same support teams while allowing the company to reduce worries about pensions and other benefits. The company will pay for a contractor about the same amount of money they had to pay for an employee with the associated benefits. However, they do not need to continue to pay the personal pension after they have retired. This does not appear to be sensible at first, but once workers have retired they generally do have a higher five year average income than employees who are in the middle of their careers. This is a considerable expenditure for a company to carry. The three of the major stakeholders in the Global Communications scenario include the stockholders who own stock in a company to receive dividends, the workers who need jobs and benefits in the company and the management who try to maintain talents and achieve the required growth. The stockholders own a stock which is an investment medium. If they have no thoughts that they will get a return on their investment, they will move their money to an investment vehicle that they believe will give them the returns that they are expecting. Stockholders also exchange their money for opportunity. They always have a reasonable expectation of a certain level of return for their money. The workers range from those persons who put their heart into their jobs to those who do enough to retain a job. Workers exchange their work for salaries, wages and benefits. They exchange their time for security for their respective families. When their benefits are reduced, the security of their families is also reduced and this leads to an environment of uncertainty. The best always get a ready market. The employees who are uncertain of their future situations should plan for their families and they should be more inclined to look when given the signs of impending adverse circumstances.
At Global Communications, the Union already gave up about twenty percent of their learning and health benefits. This alongside the news that their jobs would be outsourced would compel people to start looking to other stable sources of income. It has become the Global Communication's concern on the possibility that the best workers would be attracted away to other companies. The management has a very big responsibility. It has to cater for the stockholders, keep all the workers happy, direct the company and maintain its competitiveness in a fast changing environment. Bigger risks always entail bigger rewards. Since the management has more responsibility, it does make sense to compensate them with more pay and more benefits. However, the management has a responsibility to be more ethical and fair in the treatment of the employees. One of the problems of the management team for Global Communications was their lack of communication with the company in a timely fashion. They had a knowhow on what they wanted to do and they debated amongst themselves without giving the necessary notices to other company's stakeholders, more especially the Union workers. The information circulated around through grapevine and they suffered the consequences. For instance, their reputation in the public eye was tarnished and their credibility with the Union was subjected to a very serious risk.
Global Communications will increase its growth and market share by becoming more competitive and giving a lot of value to its employees. Global Communications needs to regain its market share and realize growth. Its leadership team also wants to cut the company's costs by cutting call centers and off shoring them to Ireland and India. Cost cutting is better, but if the goal is maintaining the employee as one of the main assets, the employees' treatment must be handled in a different way. Collective bargaining has its limitations and it is sometimes restrictive to business, but does have its place. In the Global Communications scenario, it will help protect the workers from the overzealous leadership.
Something the Global Communications' leadership could learn from other companies who have successfully weathered most difficult and challenging times is the need for communication with the employees. Global Communications leadership needs to have the communication of its vision to the rest of the company. Without this communication and warning trust has no foundation. For instance, trust and security are two of the main attributes of stable jobs. If GC is successful in averting what has turned into a very bad situation, the steps they have taken should position the company for the continued growth and profit. Global Communications will reduce its labor costs thereby reducing the total expenditures. It will implement a global sales force that will bring more business. It will be a viable company with an ability to maneuver in the global market. It would have reinvented itself for the new challenges it faced.
When researching the generic benchmarking, Pfizer and Merck were used as the suitable comparison companies. Both companies are global in reach and both faced similar problems/challenges in their income structure in the near future. This section draws some comparisons between Global Communications and these two pharmaceutical companies (Merck and Pfizer). Merck is the oldest pharmaceutical and chemical company in the entire world. This company has proven track records of innovation in pharmaceuticals and chemicals. The company credits its employees which is the main reasons for its success and growth. They also link their success to the company and focus on the application oriented research and development, as well as the close customer orientation in the marketplace. Merck is facing the problem of loss of several of its high money makers i.e. the Fosamax for treatment of osteoporosis, Singulair for treatment of asthma and Cozaar for the blood pressure desease. The Merck's Zocor had about 4.4 billion in the year 2005. Zocor sales in 2007 reduced to about 82% from 2005 levels because of the loss of patent protected status. In preparation for the loss in the revenue when several of its high profit drugs lose their patent protection, Merck Company had announced downsizing in 2006. Similar to Global Communications, Merck had to develop a working plan on how it was going to deal with this significant loss in revenue, continue to reinvent itself and keep focused on its main business (7chat). Merck Company sold its Generics subsidiary companies. The company continues to spend huge amounts of money on Research and Development. Merck Company settled the Vioxx suits for about $4.84 billion which was much less than the expected tens of billions of dollars which were initially projected.
Merck Company acquired Serono which is Biotech Company, to diversify its research and development efforts to include not only chemical formulations, but also the relevant biology based drugs. The company's business restructuring included the reduction of 7,000 positions from its global workforce. In addition, Merck is consolidating its manufacturing facilities, increasing the outsourcing and reducing the procurement expenses. The company managed to eliminate 4800 of the 7,000 positions targeted for the reduction. They closed the operations at three manufacturing facilities and also ceased the operations at two other plants by the end of the year 2008. The company is looking forward to improving its efficiencies by employing the Six Sigma principles throughout the company. It restructured its sales force and redirected its efforts to new products. Merck has tried to outsource some of its research to India. For instance, Advinus, the Indian company, will be involved with the projects relating to research and development of drugs that could be used in the treatment of metabolic disorders such as obesity and hypertension. Merck retains the rights to advance into late stage clinical trials and commercial development. The company has signed a multimillion dollar contract with Cognizant to provide some vital services such as IT infrastructure management and business process outsourcing. The Merck leadership team knew that their profit base was going to be severely impacted by the loss of patent protection of several of their primary drugs. They took steps in advance to retain the viability of the business. They communicated their vision to all employees well in advance of the need to implement the working plan. Specifics are not always in commonly available resources. However, the best practices in communication are followed in other situations and probably best practices would have been followed in having a town hall setting to share the way forward with all employees (Jet 1999).
Pfizer Company is the manufacturer of the Cholesterol lowering drug called Lipitor. Lipitor happens to be the most successful drug ever introduced. However, like Merck Company, Pfizer is facing the end of patent protection for one of its most profitable drugs. Pfizer unveiled the sweeping strategies which aimed at transforming a pharmaceutical company in need of traction to one that he hopes will produce leading drugs through a smaller research operation, fewer employees and fewer manufacturing sites. Some of Pfizer's overhaul included major staffing cuts in the order of about 20% of the United States sales staff. ( Peterson P. 2006). This would save a lot of millions a year. Pfizer Company has its own division to produce the generic versions of drugs. It authorized a generic version of its blockbuster Zoloft to its Greenstone subsidiary.
Pfizer company has retained its generic drug division while Merck company has sold its generic drug division. It has also diversified its portfolio to include biopharmaceuticals with its acquisition of BioRexis. The Pfizer Company is employing the outsourcing for part of its manufacturing operations. It is looking into the viability of moving up to about 30% of its manufacturing to China. It is also expanding its research efforts in India and South Korea. The outsourcing plans follow the Pfizer's announcement at the beginning that it would close manufacturing sites in New York and sell the third manufacturing site in Germany. Pfizer Annual Report of the year 2006 listed 5 priorities for the company. One of the priorities is to make Pfizer a great place to work in. This goal of making Pfizer a great place to work is outlined as one way of finding new ways to work together, reducing supervision, increasing the accountability and encouraging our employees to think like the owners of the company. Pfizer is constantly examining its position in its market. It has had to make some hard choices in its endeavor to streamline its manufacturing, realign the workforce and maintain its market share. They did communicate all the decisions to the employees in a formal manner before the actual staff reductions. Their plan included reducing the workforce, consolidating the manufacturing plants, finding more applications for the existing drugs and acquiring the biopharmaceutical companies (Hoovers Inc. 2008).
Global Communications can obtain or learn several key points from the two companies (Merck and Pfizer). They kept their employees well informed and up to date. When they came up with a plan, they notified the employees about the key points that were in the plan. The fine details were released as the specifics of the plan were being worked out. The two companies did plan on reducing the workforce and they both planed on reducing the quantity of production plants thus reducing the excess manufacturing bandwidth capacity. They both saw the need to increase the diversity of their main products. They knew when several of their core products came off of patent protection their profit margins would reduce. The Global Communications leadership needs to revisit their timeline for the implementation. They need to communicate with their employees about the specifics in a town hall setting. Perhaps the leadership can use some of the tactics of the other companies and be more proactive in getting the input of the major stakeholders before making the unilateral decisions. Merck and Pfizer both say that they have much interest in their employees. These companies have employee training and development programs. The Global Communications leadership can implement the employee training and ask their employees if they want to travel and be expatriate employees. This reduces costs, but retains jobs. (Weitz B & Wensley R. 2002).
Analysis of Alternative Solutions
The company could continue on its current path without changing anything. However, this would be the least effective action it could do since it is looking to increasing its viability and profits. This course would do nothing for the employees and it would also affect the company's growth. The company could lay off the employees and this would go a long way towards the company survival, company's profitability and growth, but very little or nothing towards employee job stability and benefits. This option is only better for the overall company health and the benefit to employees who wish to remain. Global Communications could outsource because outsourcing would be good for the company's survival and it would be good for the profits and growth potential of the company. On the other hand, outsourcing would be very bad fort the employee jobs and employee benefits. Another alternative is that Global Communications could diversify or form partnerships with other companies because it is good for the company's survival, profitability and growth. The diversification is also not as harsh on the employee's job retention and benefits (McPhail L. 2010).
Risk Assessment and Mitigation Techniques
The company could choose to let all the things run the way they are running. The company will continue losing market share and may be taken over by a competitor. This would be dangerous to the company and the employees. The only act to assist with this situation is the stringent control of the costs and reducing the spending levels. Layoffs are very demoralizing. Many people lose the company loyalty or the organizational commitment. They do not have any emotional attachment to the identification with and involvement in a particular organization. A second option for the company is layoffs whose threat is one of the greatest blows to the employee loyalty, even among the people whose jobs are not at immediate risk. While this would have a high rating towards the survival of the company and relatively strong ratings for profit and growth, it would rank very low for the employee benefits and jobs. Since people are the ones who make a company what it is, having a layoff would leave the company in a very bad situation when attempting to hire new employees and assuming that their strategy to turn the company's fortunes around will succeed. Some mitigating factors could offer retention incentives to key employees and can be reserved in the layoff sweep. Layoff as selectively as possible, so as to avoid having a big layoff and a hiring phase a relatively short time later. A well rated option was outsourcing. This outsourcing option ranks equally to layoffs with a value of about 3.29. It scored higher in employee benefits, but much lower in profits. Obviously, all the options rank low on the employee jobs and benefits goals. This option's risk is the high employee dissatisfaction and the risk of substandard customer service.
Many times when off shoring to other countries, language barrier is difficult to overcome. Some mitigating efforts include putting a freeze on hiring at the higher paying call center and implementing a reduced expansion call center in India and have language training classes at the new call centers. The best option was diversifying with partners. This had high marks for survival of the company and medium to high marks for growth, profits, employee jobs and benefits. Of all the options, this appears to be the best solution. Both the employees and the leadership get to keep the company moving. The profits and growth are viable. The employees do not necessarily lose their jobs and their benefits are intact.
The optimal solution for Global Communications is for the company to be involved and forming partnerships and holding off on the outsourcing of jobs to other countries such as Ireland and India. Global Communications leadership team needs to communicate more openly to employees and in a richer medium. The leadership needs to keep in mind its employees' job satisfaction as a motivational keystone of employee commitment to the company. The leadership also needs to keep in mind that the emotions evoked by all the changes are strong and will motivate many people to look elsewhere for employment if their need for stability is not met in the company.
The leadership team needs to focus on their main values. In the past Global Communications has valued its employees and the employees have given back loyalty and put forth the necessary effort to make Global Communications a valuable company. While Global Communications' chief executive officer is a great globalization fan, she cannot just start chopping and pruning without regard to the company's history and core values. The management team will need to work closely with the companies that Global Communications can align with to form partnerships. The Vice President of Technologies Workers Union, can assist in selling the revised plan for Global Communications to the Union and facilitate smooth working relations between the Union and the company (Philips C. 2006).
Evaluation of Results
The outcomes would be measured against the balanced scorecard. This includes four items namely
Learning and growth perspective
business process perspective
(Balanced Scorecard Institute, 2007) .The first item is important for Global Communications because it will be the success of the company. Global Communications needs to be concerned with training and development of its employees, not only for skills transfer, but also for the company employee development.
Secondly, the business will have some metrics such as market share and whether the sales and percent of total market percentages have increased. The issue is that in the past years the erosion of the customer base has occurred because of the intrusion of cable providers into the market space. Thirdly, Global Communications should offer packages that offer value to all customers and it should be innovative in packaging the popular items. The company should allow the customers to choose their own package, say two of the options they want instead of prepackaging ten options they will not use.
Global Communications Global can show that they value their employees by seeing if there are creative ways to retain employees instead of taking the easy way out and seeing how much they can outsource and cut total costs. They can ask employees if they want to move to Ireland. They can see if the employees can be able to work from home or have flexible work schedule. If the layoffs need to happen, Global Communications should provide job counselors to assist with the new job searches.
Global Communications' leadership and management teams have a great deal of work ahead of them. They must breach the gap that the company has introduced with its union and implement a relevant growth strategy. The growth of Global Communications should not come at the expense of the union workers. The Global Communications management needs to work harder to get back to the company's core. They need to protect the asset of the company