Global Communications
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An industry-wide trend of declining confidence has adversely affected the telecommunications industry. Global Communications (GC) is no exception. GC has experience a decrease in stock value over the last three years from $28 per share to $11 per share. Market saturation and competitive ingenuity have stunted GCs growth domestically. GCs international presence is virtually nonexistent. The Senior Leadership Team has identified issues and opportunities. They have considered the perspectives of the stakeholder and ethical dilemmas they foresee. The nine steps of problem solving will show the Senior Leadership Teams end-state vision, alternative solutions, risk assessments, implementation plan and the evaluation of the results. As stated, the industry has experience a decline in stock value. Through benchmarking telecommunications industry leaders, GC has found certain facets of the industry they are willing to incorporate.
Situation Analysis
Issue and Opportunity Identification
Global Communications has experience a decrease in stock prices over the last three years of more than 50 percent. It is currently traded at $11 per share, compared to $28 per share three years ago. This is due to market saturation, competitors ingenuity, and a stagnant advertising campaign. However, through benchmarking industry leaders in telecommunications, GC has found declining stock values are not uncommon. In addition, GC found outsourcing call center labor for technical support is a common trend throughout the industry. Considering this option, the Senior Leadership Team of GC has created a dilemma with the Technologies Workers Union (TWU) because the information of their plan to outsource the call center labor has been leaked to TWU leadership. Because GC plans to implement this proposal without consulting the TWU leaders, the relationship is strained. In addition to the adverse reaction of the TWU, GC will face the difficulty of expanding call center operations internationally.
Although resolving these issues will prove to be difficult, resolution provides a significant opportunity to generate capital and expand. The Senior Leadership Team of GC succeeded with its proposal in convincing the Board to approve the aggressive domestic and international advertising campaign, development of new products and partnerships, and outsourcing the responsibilities of some call centers to India and Ireland. This proposal will require GC to re-evaluate its relationship with TWU and maximize its return on investment from the expertise of the employees in India and Ireland. Outsourcing the call center labor is expected to reduce the unit costs for calls by nearly 40%. Through analyzing competitors and trends, GC has made the strategic decision to implement the plan to outsource the labor. Outsourcing is an essential step to the long term plan to resolving the issue of poor performing stocks (Gomez-Mejia, 2002, p. 210).
Stakeholder Perspectives/Ethical Dilemmas
The new proposal realizes the interests of the shareholders and investors as priority. The Senior Leadership Team is taking the necessary steps to cut cost through outsourcing. They also plan to capture market share by creating partnerships with wireless internet providers and alliances with satellite providers, develop new products, and advertise more aggressively in domestic and international markets. The primary interest of the shareholders is to maximize the financial return of investment. From the perspective of the shareholders, the company has their best interests in mind.
On the other hand, the interests of the GC employees who currently work in the small business call centers are not as much as a priority as other interests. The scenario clearly shows the interests of the employees were considered. The decision to close the small business call centers and eliminate those positions domestically was essential to the survival of the company. Ethically, it is the right choice. Outsourcing has become a trend to secure the survival of companies and ensure maximized profits. “According to Towers Perrin, a management consulting firm, Fortune 500 companies slashed the number of people on their payrolls by more than 18 percent from 1983 to 1993, a process that is continuing And over that same period, as payrolls were slashed and job security diminished, corporate profits increased more than 57 percent after inflation” (Bookman, 1996, p R.01). In order to save the company, which provides employment for thousands of people, the company chose to relocate a relatively small number of positions outside the United States. Requiring employees who transferred to the consumer call centers and to accept a 10 percent decrease in pay is questionable ethics. However, the company is not requiring their employment. They are simply stating if the employee accepts the transfer, he/she will need to accept the decrease in salary.
With the decision of outsourcing labor and proposed pay cuts, one of the most significant losses is the membership and power of TWU. The President of TWU stated GCs plan to outsource the small business call center labor would set a precedent when, it seems, that precedent has already been set by GCs competitors. Although union labor is more costly, TWU has a track record of working with GC management to resolve issues. The employees agreed to a 20 percent cut in educational and health benefits. The willingness compromise with GC and sacrifice for the good of the company warrants advance notification of the decision to outsource. The company allowed the information from the plan to be leaked to the union leadership. Whether it was intentional is irrelevant. An explanation to the union leadership should have been drafted before any information of the plan was discussed outside the boardroom. At this point, the company needs to work with TWU to develop a collaborative solution to the issues at hand.
Problem Statement
By utilizing methods to reduce cost and diversify their market and products, GC will increase profits and have the ability to capture significant market share domestically and internationally, thus increasing stock value.
End-State Vision
GC is striving to be nothing less than the leader in the telecommunications industry, providing a secure and sound investment for its shareholders. In order to accomplish this goal within three years, GC will need to diversify its products and markets, increase market share, and, most urgent, resolve the labor issues. Closing the small business call centers will offer an immediate resource to accomplish other goals. The elimination of these positions