Telecom Turnaround Case Solution

1. Were there any weaknesses with the business model?

The major weakness of the business model lied in its inability to recognize the importance of restructuring at the time of the merger. The two organizations worked as separate entities and had developed different organizational culture at their respective offices. On merger, the single body formed had to be structured as a single working unit. If, the purpose of the merger was to sign a paper and achieve common goals then it was just a partnership and not a merger. However, the major flaw in the business model was that it failed to incorporate the importance and implications of a restructuring charge. There are various business functions that would have overlapped after the merger. Therefore, the top management should have restructured the entire organizational structure and ensured uniformity. This would not only smooth the flow of information and policies throughout the organization, but will also help to reduce transaction costs and improve operational efficiency. It can be seen as a major chunk of costs arises from the operations of the company. This depicts a great deal of operational inefficiency, which results in higher management costs.

Also, the company focused on growth while not giving equal importance to profitability. It is to be understood that when a company is globally presented at a lot of destinations, it becomes an internally fractured organizations in the absence of a strong internal coordination. It is not only difficult to manage but also it becomes difficult to maintain focus on common goals. Most of the times, organizations strive in several different directions at the same time. This not only creates a lot of hazards for the management, but also results in the loss of money. This is because; it is difficult to keep track of money.
Another important factor was the type of industry that the company operated in. It is a highly technology intensive industry where technology keeps changing on a regular basis causing a lot of capital expenditures to be taken care of. This change in technology also gives rise to the importance of a cut down on other costs. The estimated demand pattern did not hold according to the industry dynamics. This means that the demand pattern was waivered, and estimated demand was far greater than the actual demand.

Also, the business model lacked a good risk and mitigation plan. The organization did not highlight its risks and how it would deal with each of them.

2. What were the options for improving business performance?

There is couple of options that the company can pursue in order to solve the problems:

Firstly, the company must pick between a one unit model and a separate unit establishment across the globe. This means that either the company continues operations based on a centralized policy in which all policies are made at the head office and implemented uniformly across the globe in every office. Or, it could decide to give more autonomy to the field offices. This would make sure that the field offices operate as per the environment of the country they are set up. Not only will it lead to customized products, which will be country specific, but it will also ensure that the company is making profits by meeting the demand.