In an ailing economy, competition amongst businesses is fierce. Organizations are constantly at odds with one another in an attempt to remain number one in their industry. The telecommunications market is no different. With cable providers offering services that were once limited to the local phone company, many organizations are facing unfortunate reality of losing their customer base to companies which can provide and umbrella of services.
As with any organization, Global Communications is at a cross-road. The ability to sustain its organization rests on whether or not it can develop new services that will appeal to its customer base. Within three years, their stocks have plunged from $28 per share to a staggering $11, over a 50% reduction. As a result, the organization is facing many challenges. Though senior leadership has developed a plan that will provide new services, increase market share and cut costs allowing the organization to survive, the plan will also cause many domestic employees to either lose their jobs or take a significant pay decrease to remain on board.
Situation Analysis: Issue and Opportunity Identification
As with many real-life organizations, the fictitious company, Global Communications is facing economic challenges. The first issue the organization faced is that stockholders are getting antsy as they are seeing diminishing returns, and there is much speculation regarding whether or not the company will be able to survive. The competition is fierce as many cable providers are now offering telephone and internet services as well. These complete packages are enticing to the consumer as it provides the convenience of receiving three services in one place. Prior to this particular issue, stocks were being traded for as much as $28 per share, however now the value is $11.
Global Communications senior leadership team, as a result of this particular issue has come up with a “two-pronged aggressive approach. First, they plan to realize growth through the introduction of new services, primarily to its small business and consumer customers, who will now be served in both local and long-distance markets across the country. To compete with the local telephone and cable companies, Global has created alliances with a satellite provider to offer video services as well as a satellite version of broadband. Partnership with a wireless provider will allow the small business owner anytime Internet access using wireless telephone or PC cards. Even company information hosted in mainframes can be accessed remotely. Second, the senior team has identified cost-cutting measures that will improve profitability. To maximize both of these initiatives, the company plans to market itself more aggressively on an international level with the goal of becoming a truly global resource,” (University of Phoenix, 2009, ¶3).
While this two-pronged approach is a great opportunity for the Global Communications as it allows them to improve the overall organization, save money, and market themselves as an international entity, it is not without fault. In order to expand internationally, Global Communications will have to downsize its domestic call centers requiring some employees to be demoted in salary and position while others will be laid off. This is the beginning of issue number two for the organization. According to Global Communications’ Executive Vice President of Consumer Marketing and Sales, Sy Rodriguez, “Downsizing our domestic call centers has major implications. Although some of our current call center reps can be relocated to our expanding consumer call centers, many will be let go. Those who are relocated will be expected to take an average 10 percent salary cut, since consumer centers operate on a leaner budget than the small business centers. I don’t expect the workers to take this announcement lying down,” (University of Phoenix, 2009).
Global communications has the opportunity to smooth over the situation by being upfront with their workers, as well as the Union in regards to their plans, however even in doing so, they will face harsh criticism as their motto has always been “Our Edge Is People.” This newly developed plan goes against what the company has always stood for.
Stakeholder Perspectives/Ethical Dilemmas
The major Stakeholders in this scenario are the organization itself, Global Communications, its workers, and the Union. The Union has already given up 20% of its education and health benefits, and as stated the workers will be effected the most, particularly those who will lose their jobs. Global Communications needs to be cognizant of the ethical dilemmas it will face in laying off its employees as it moves towards restructuring its organization. Henke-Hadley (2008) states, “While cost reduction through job elimination or restructuring poses no legal implications or policy violations, it certainly presents many ethical problems. How the company proceeds could greatly affect the consumer view of their business practices. They also have the potential to place some employees in a position of being ethically challenged should they inform some parties of the possible downsizing but insist the information be kept from others. That will leave those employees who are aware with the ethical dilemma of telling what they know to those who will be affected or of keeping the company secret. The feeling though, that others know more and will not share the information, leads to extreme paranoia and dissatisfaction among lower level employees,” (¶2).
Employees are granted certain rights in the face of a layoff. Employee rights might entitle you to collect state unemployment benefits and purchase COBRA extended health insurance benefits at group rates after you’re laid off. Employee rights also protect workers from their employer illegally firing them under the cover of a layoff. Additionally, employee rights might require the employer to give employees advanced layoff notice, so that they may at least prepare financially to lose their job while searching for another during the layoff notice period. Under certain circumstances, the Worker Adjustment and Retraining Notification Act (WARN Act), a Federal “layoff law” so to speak, requires employers to give affected employees up to 60 days of advanced notice for mass layoffs or plant closings. Under the WARN Act (or an equivalent state law generally referred to as a “mini-WARN Act”), the employer must continue to pay the employee and grant them the benefits to which you’re entitled through the advanced layoff notice period, whether or not the employer requires them to work through it (Employee Issues, 2009). In this same token, the Union has the responsibility of protecting its members. If there is any concern that member rights have been violated, the Union has the right to represent their members in a legal capacity.
In an effort to avoid history repeating itself, Global Communications will continue to work closely with the wireless provider to ensure optimum service to its customer base. Upon the company’s success with the two-pronged strategic plan, a marketing department will be set in place specifically for the purpose of watching industry trends and finding the most cost effective ways to remain competitive in the telecommunications market. Global Communications will also work more closely with the Union to make better decisions regarding employee retention should the company ever find itself in a similar position.
Global Communications needs to address the issues of facing a competitive market. Cable providers are taking a large chunk of business by providing “complete solutions” to consumers with cable, telephone and internet services. In order to compete, Global communications must develop a plan that will allow the organization to provide comparable services in order to maintain market share. In addition to offering new services, Global Communications must reduce costs by cutting down their domestic workforce size and outsourcing to India and Ireland which will provide employees who are already trained in the new systems at a lower labor cost.
Global Communications, like many real life organizations is dealing with the natural issues of a declining economy. Increased competition and the fight amongst organizations to stay alive has but every in a position of “sink or swim.” In order to protect their organization, the leadership at Global Communications must make some tough choices that unfortunately will not be to the benefit of everyone. The bigger picture is that though the organization’s view in the eyes of the public will be tarnished, all is not lost, and while the company may receive some backlash for outsourcing to India and Ireland, the bottom line is that doing so will cut costs and position the company to better sustain itself in the future.
Employee Issues. (2009). Layoffs. Retrieved from http://employeeissues.com/layoff.htm
Henke-Hadley, J. (2008). Ethical Implications of Layoffs and Downsizing. Associated Content. Retrieved from http://www.associatedcontent.com/article/813387/ethical_implications_of_layoffs_and.html
Hoch, S.J., Kunreuther, H.C., & Guenther, R.E. (2001). Wharton on Making Decisions. Hoboken, , New Jersey: John Wiley & Sons, Inc.
University of Phoenix. (2009). SCENARIO: GLOBAL COMMUNICATIONS. Retrieved from University of Phoenix, MMPBL500 – FOUNDATIONS OF PROBLEM-BASED LEARNING website.