1806 words (5.2 double-spaced pages)
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Gap Analysis: Global Communications
Global Communications faced a difficult and arduous decision. The company is declining and a new growth strategy is ready for implementation. The growth strategy will enable Global to become more competitive and responsive to their customers. However, the implementation of the plan was not thought out clearly causing conflict and division. How can Global fix their issues? The problems Global faced were looked at and measured against the concepts presented in the cited texts.
Issue and Opportunity Identification
In the scenario downloaded from rEsource, Global Communications faced difficult times. The stock price dropped over 60% within a three year period. Stockholders were anxious and their confidence was declining. The scenario indicated there was tremendous pressure to turn around economically.
The blame was placed on the entrance of the cable companies into the telecommunications industry. Cable companies, with advanced technologies and infrastructure, were able to not only provide television entertainment, but also phone and internet access. This was something Global Communication was lacking in. Global Communication could no longer compete in customer service.
In Understanding Business, 5th Ed, Nickels and McHugh state:
Competition among business has never been greater than it is today. Some companies have found a competitive edge by focusing on making high-quality products. The goal for many companies is zero defects-no mistakes in making the product. However, simply making a quality product isn't enough to allow a company to stay competitive in world markets. Companies now have to offer quality products and outstanding service at competitive prices. That is why GM is building automotive plants in Argentina, Poland, China, and Thailand. Combining excellence with low-cost labor and minimizing distribution costs have resulted in larger markets and long-term growth for GM (pp10-11).
This is the environment Global in operating in. The cable companies have the high-quality products that are in high demand. Consequently, Global intends to capitalize on not only updating their products, but by introducing new products and services, targeting specific customer demographics, and decreasing expenses while increasing customer satisfaction.
Nickels and McHugh also state there are four factors for operating in a highly competitive environment.
First is competing by delighting the customer (Nickels and McHugh,, 1999, p.11). This is what Global intends to do by introducing their strategic alliances with satellite and wireless providers. Coupled with their new calling features, video and wireless services now make one-stop shopping for all communication needs convenient for the customer. Also, the outsourcing plan is designed to increase technical sophistication of the support personnel to provide a better experience for the customer.
Second is competing by meeting the needs of the community (Nickels and McHugh,, 1999, p.12). Meeting the needs of the community is addressing the concerns, wants, and needs of the stakeholders. By introducing the new products and services and decreasing costs, Global puts themselves in a position to increase value in the company by expanding the customer base, thus increasing market share. This also not only addresses the concerns of the stockholders, customers, and management, but it also provides job security for the workers.
Third is competing by restructuring and meeting the needs of the employees (Nickels and McHugh,, 1999, p.13). This is an area that Global is weak in addressing. The scenario stated that the employees and union agreed to concede approximately 20% of their benefits to assist in the cost cutting measures to keep the company viable. The management team decided to outsource anyway without involving the union, giving the perception that the worker's opinions were insignificant. Since management needed time to "spin" the information in a favorable light, much innuendo and rumor spread by the grapevine.
When Global decided the course of action, only the Board of Directors and the Executive Management had any input in the plan. Earlier, the union took wage concessions under the premise that job security would be assured. However, the decision was made to outsource the labor to save an additional 40% of the wages for the call center personnel.
This information was not disseminated in a timely manner leading to the rumor mill ar grapevine. Kreitner and Kinicki stated although the grapevine can be a source of inaccurate rumors, it functions positively as an early warning signal for organizational changes (p 541). When workers hear of changes unofficially, it causes greater confusion, since there are no checks and balances in the grapevine communication. Half-truths are spread with the same conviction and whole-truths. When the communication is not timely presented, it also sows seed of mistrust between the workers and the management, looking like there is something to hide.
These changes were made without representation of the employees' interests. From the perspective of the union, this showed a disregard for the worker. The perception was one of hostility and there was no negotiation taking place. In earlier negotiations, the union agreed to concessions as a trade off of keeping everyone employed. When the decision was made, it was very one-sided and hurt the credibility of the union rep and the company management. This is a type of distributive negotiation. Distributive negotiation usually ends up in a win-lose situation (Kreitner and Kinicki, p504).
During the course of discussing this plan with the management team, one of the senior managers brought up the problems with this plan. The CEO did not want to listen and shut him down. He capitulated and sought ways to distort the communication. Communication distortion occurs when an employee purposely modifies the content of a message, thereby reducing the accuracy (Kreitner and Kinicki, p. 543). The discussion centered on how to deemphasize the pending layoffs and building up the long term goal. There was no buy-in from the union.
Fourth is competing by concern for the natural environment (Nickels and McHugh,, 1999, p.14). Even though it was not specifically mentioned in the scenario, the natural environment provides the resources for the business to operate. Protection and conservation of these resources becomes important in the competitive market, especially when the resources are non-renewable or renewable after a great deal of time, such as crude oil and lumber. In order to remain competitive, the resources must be available when needed.
Stakeholder Perspectives/Ethical Dilemmas
Four specific stakeholders were identified, stockholders, company management team, customer base, and the represented employees. Each stakeholder has particular views which sometime conflict with one another. When these conflicts arise it may present differing ethical dilemmas.
Stockholders are looking for increased equity, return on investment, performance, and decreased liabilities. The customers demand high quality products and services, variety, and low cost. Company management desire increased profitability and revenue, increased market-share, decreased expenses and lower wages for labor. Worker's union wants higher wages, increased benefits, and job security.
These values sometimes overlap and sometimes conflict. For example, the stockholders and the management both want higher company performance and profitability, but the customer wants low cost. This conflict is generally settles in the free market by supply, demand, and competition. When the prices are stabilized and demand equals supply, equilibrium is achieved (Parkin, p. 78) and the conflict is resolved.
On the other hand, management wants low labor costs and the workers want higher wages. This conflict usually results in a negotiated settlement. The most effective settlement occurs during integrative negotiation (Kreitner and Kinicki, p. 504). During integrative negotiation, multiple parties are able to form a consensus based on compromise. This allows for better buy-in towards the outcome, even if it isn't exactly what each party wanted in total.
Each negotiation must be conducted using best business practices and within the law. Questions to ask yourself during the course of negotiation, is it legal? Is it moral? Is it ethical? Is it fair (Hynds, personal communication, 22 Jan 07).
Global Communications recently lost significant equity, value and service due to stiff competition in the telecommunications industry. Through new products, customer service, partnerships and alliances, and fiscal responsibility, Global Communications will increase market-share, close the gap, and pull ahead of their competitors. Global Communications will be an international powerhouse within the nest three years through globalization.This will regain their standing as a leader in the telecommunications industry.
Global Communications is currently in a state of decline. Revenue and stock prices are down. Competition is fierce. The cable companies are moving in on Global's core competency, plain old telephone service, but Global doesn't have the technology or capability to compete in the television market. For Global, this is an untouched market.
Within the next three years, Global Communications plans to aggressively market itself to become an international force through globalization. Part of the globalization process is outsourcing labor to countries with a cheaper workforce, without sacrificing quality. This has the added benefit of creating a presence in the foreign market with the opportunity for international expansion.
To remain competitive and regain domestic market share, Global has forged alliances with both satellite and wireless companies to expand the products and service they can offer. The satellite company provides access to the television market and broadband internet market, while the wireless provider can deliver internet access anytime and anyplace there is cell service. These services together are targeted towards the small business and residential customers, which make up the bulk of the telecommunications industry.
Locations have been selected overseas with a local national workforce costing 40% less than domestic workers. This leads to significant savings in payroll. From the monetary aspect, this makes sense. This creates a surplus within the company allowing for downsizing with the associated payroll reductions. During the post and bid process, any domestic employees retained will receive a 10% reduction in salary, saving even more. This also frees up the unneeded real estate which can be sold to generate another income stream.
However, this plan, which could succeed, has alienated the workforce due to faulty communication and stubbornness. The CEO refused to take any input from her subordinates since the plan was already put together. No other alternatives were explored. Not all the critical people were present during the decision making process.
The better serve the customer, the company, and the employee, each alternative should have been explored. Communication should have been timely and clear. Communication should also be upfront and honest. In this environment, everyone working together is the only way to succeed.
During the course of this exercise, I learned the value of considering alternate options before deciding a course of action. I think many issues could have been avoided for Global communications had each member sat down and discussed things face to face. This might not have made everyone happy, but everyone would be involved and the acceptance would have been easier. Interpersonal dynamics play a large role in the communication process.
Kreitner, R. & Kinicki,A., (2003). Organizational Behavior: Sixth Edition. New York, New York: The McGraw-Hill Companies.
Nickels, W., McHugh, J., & McHugh, S., (1999). Understanding Business: Fifth Edition. Boston, Massachusetts: Irwin/McGraw-Hill.
Parkin, M., (1998). Economics: Fourth Edition. Reading, Massachusetts: Addison Wesley Longman, Inc.
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"Global Communication Gap Analysis." 123HelpMe.com. 15 Apr 2014