Situation Analysis and Problem Statement: Global Communications Corporation

Situation Analysis and Problem Statement

This paper deals with the issue faced by the telecommunications company known as Global Communications. Global Communications competes in and industry that is known for unusual competitive pressures and very quick changes in technology. However, as stated by Dennis Drogseth (2005, p. 52) "The challenges faced by global networks have more to do with management and process than with pure technology." This paper will address the issue faced by Global Communications and explore the issues and opportunities available to Global Communications management. I will also explore some stake-holder views, and finally provide a proper problem statement followed by my opinion of what should be the goals of Global Communications.

Situation Background (Step 1)

The telecommunication industry has experienced rapid growth and an accompanying huge investment in transmission capacity. This growth has put tremendous economic pressure on the telecommunications industry, and Global Communications is not immune. In addition the telecommunications industry has fallen under huge competitive pressures from cable companies who are now providing competitive services in areas such as telephones, computers and television. All this competition has reduced wall streets confidence in Global Communications and resulted in a 60% depreciation in its stock value.

Global Communications has responded to this pressure with a suite of new calling features, local and long distance service and by entering new international markets. All with mixed results. The situation with Global Communications is not unique. In today's

global environment many companies, due to increased competition, must reduce costs in order to remain competitive. As a response Global Communications has developed a plan to out-source its call centers to India and Ireland. In addition Global Communications has developed a partnership with satellite providers to offer new services such as video and broadband connections that will allow small businesses to anytime internet access using wireless telephones or PC cards.

In order to implement these changes Global Communications will need to inform its domestic union represented workforce of the impending reduction in the union workforce. This will not be an easy task given that the union leadership was left out of the decision-making process and have recently agreed to reduced education and medical benefits in order to help the company. The lack of communications with the union could easily become an issue very quickly as the union is not very happy with the impending loss of jobs.

Issue Identification

There are several issues that Global Communications will face when trying to implement their turnaround plan:

First, is the issue of the disgruntled union employees. As the union learned of the planned reduction in the workforce, they have become understandably agitated. Global communications executives did not seem to take into account the theory of Organizational behavior when they went about developing their turnaround plan. As with any non-skilled labor force the unions have a high sense of "continuance commitment." This type of commitment, basically being unable to leave a bad situation has caused the union to considered a work stoppage as a way to get Global Communications to recognize the unions needs in this situation.

Second is the issue of stockholder confidence. There are several reasons for the low confidence. Reduction of stock price, competition, the financial resources needed to implement the turnaround plan, and, of course union unrest, all work to make the stockholders nervous.

Third is increased competition. Although the approach to this issue by Global Communications is a good one, the competition will not just go away. Global Communications can expect their competitors to also be developing and implement plans to increase their market share as well.

Another issue that may arise for Global Communications is one of cultural differences. As Global Communications begins to enter the foreign markets of Ireland and Australia, Global Communications may encounter cultural issues that they have not yet addressed. Global Communications must begin to recognize and address the issues that may arise as they begin to work with cultures that they may not have encountered in the past.

The fifth issue that Global Communications will face involves the retention of high performing employees. These employees may view Global Communications as a sinking ship. Most likely these employees are tied too the company through the behavior known as 'organizational commitment'. Employees that have the ability to find other employment with companies they view as more stable with improved opportunities will leave unless enticed to stay through some sort of incentive. This may prove to be costly for Global Communications.

Opportunity Identification

There are also many opportunities presented to Global Communications:

First is the alliance created with a satellite and wireless provider. This alliance will enable Global Communications to provide video and broadband services. The partnership will allow Global Communications to offer small businesses anytime access to the internet through wireless telephones or PC cards.

A second opportunity of reducing labor cost is created through the out-sourcing of jobs to Ireland and Australia. From the business perspective, there is nothing inherently wrong with out-sourcing, labor and capital flow where they can be efficiently employed (Fox, 2004). Out-sourcing, however; will create labor issues at home, if Global Communications can avoid a labor strike at home, the reduced labor cost in Ireland and Australia will position them for a period of sustained growth.

Thirdly, the out-sourcing takes advantage of the high technical sophistication of the workforce of Ireland and Australia. The technical sophistication of a workforce can have benefits such as innovativeness and efficiency which can further increase the profit potential of Global Communications.

Increased stock price can be an opportunity that may be realized if Global Communications can begin to implement the plan while avoiding some of the negative issues. If investors see some potential in the plan, they may view the current stock price as a bargain. The subsequent purchase of the stock will create upward pressure on th price. The upward pressure on the stock price in turn creates cash flow and momentum for the plan.

The fifth opportunity for