Problem Solution Gap Analysis: Global Communications

Running head: PROBLEM SOLUTION: GLOBAL COMMUNICATIONS

Problem Solution: Global Communications

Jesse Neubert

University of Phoenix

10/30/2007

Problem Solution: Global Communications

Gap Analysis: Global Communications

Years ago Global Communications was at the forefront of the telecommunication industry. Profits and market share continued to rise as the demand for traditional land line phone services grew. Now demand for such traditional services has decreased dramatically. Telecommunication companies have been facing increasing economic pressure and GC is no exception. Stock prices have fallen over 50% and GC is in major financial trouble. GC’s executive management team has developed a new strategy to increase growth and profitability. The new plan entails cost-cutting measures to improve profitability (primarily outsourcing certain customer service functions), globalization, and by offering a new array of services targeted at small business and individual consumers. While the new strategy seems like GC’s only hope, they are experiencing increasing opposition from their employees’ union regarding the outsourcing plan.

Situation Analysis

Issue and Opportunity Identification

Global Communications is experiencing financial hardship due in large part to the nature of the telecom industry as a whole. Telecommunication companies such as GC faced little competition in the past and an ever increasing demand for their product that was proportional to the increase in population growth. With little competition, GC had no incentive to make its services unique and adaptive to the changing market. While GC stood stagnant, dumping funds into its core landline business and contemplating mergers with smaller telecom companies, other competitors began to enter the market with new and innovative product mixes. Once demand for traditional landline phone service dropped off, so did the stock price of GC, along with investor confidence. If GC is to remain viable, care needs to be taken in developing new and improved services to serve the market. A newly structured cost-cutting financial plan should aid in freeing up additional capital to use for R&D projects.

In the past GC depended mostly on increased demand for their product based upon the growth trend for the industry and population growth nationwide. The only other avenue GC looked to for growth was in establishing mergers with existing telecom companies to increase market share. Outside of those two avenues, GC did not develop, nor explore, any other means or strategies to increase market share and long-term growth. GC’s new business plan must address this issue. The primary opportunities for growth will most likely come from the creation of new services and products, and by entering new or niche markets nationwide and abroad.

GC began to formulate a new business plan that involved outsourcing certain job functions and laying off workers without keeping the employee union informed on the proposed plan. Union heads had previously negotiated a plan to cut education and health benefits by 20% and were not aware of any additional cuts being made in the near future. Not informing the union of the proposed plan has created mistrust and a sense of closed communication channels between GC management and the employee union. In addition, union heads have been under intense scrutiny for not knowing about the proposed plan in advance. It may be beneficial for GC to bring in outside communication consultants, as well as establishing a negotiation team to help ease GC-union tensions and to facilitate future talks regarding employee benefits and outsourcing.

Due to many factors GC is all but financially ruined. Like most other telecomm companies of old, GC handled its incoming cash flow badly. Instead of investing in new technology and cost-cutting strategies, GC dumped most of its available capital into its dying core services. Bad financial decisions has created a sense of despair for shareholders and low investor confidence. GC would do well to set up a finance team to identify all possible cost-cutting measures and wasted expenditure. This would allow GC to implement all cost-cutting measures that are in line with their end goal, thus increasing available capital for growth, R&D, and various other measures.

Stakeholder Perspectives/Ethical Dilemmas

As GC struggles financially, so do its shareholders. And with each release of GC’s financial statements the shareholders and investors become ever weary and cautious about retaining their shares of GC. This situation not only hurts the profitability of the company, but also that of its shareholders as a whole. GC needs to develop a plan that will increase shareholders’ confidence and one that will also lead to increased profitability in the near future.

The executive management team faces both the financial dilemma of GC and the implications of their new strategic plan on their employees. The surest way to cut costs quickly and efficiently is by outsourcing. However, this will cause a PR nightmare with both customers and their employees alike. GC’s motto is “Our edge is our people.” Therefore, outsourcing may have a negative impact of how the public and employees view GC. In addition, management has a vested interest in the company as their compensation and stock options are performance based.

Employees are not as much concerned with the profitability of the company as they are with job stability and benefits. Outsourcing inevitably means layoffs and job cuts. In addition, cost-cutting measures may entail an additional decrease in employee benefits. Employees who catch wind of the outsourcing plan before layoffs occur may leave the company for a competitor, and productivity among employees may dwindle due to the negative implications of the new business plan.

The board of directors, unlike the executive management team, has a fiduciary responsibility to the company itself, not the shareholders. This may create a conflict of interest regarding moves that may increase stock prices, but negatively affect the company in the long run. The board of directors also has little care about employees, so long as the decisions made are in the best interest of the company itself.

Problem Statement

Global Communications