Onetel Case Study

Onetel Case Study

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One.Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). At first, it looked to get the advantages from deregulation of telecommunication industry by reselling other network’s capacity and making money through stock market speculation. Rich and Keeling tried to increase the company’s shares rather than to profit the company (Cook, 2001). Initially, One.Tel used to develop the culture of strong teamwork and togetherness. There was no hierarchy in the structure of the company. However, the dissonance of its culture and system is the main factor that led to One Tel decline.
One.Tel failure had been indicated since there was a sharp fall in its share price in 1999 (Cook, 2001). In 2001, OneTel had no cash left to pay the expenses and it had huge debt. The company expanses too fast so that the billing system cannot handle it and the customers did not receive their accounts. Jodee Rich, as the main founder of the company, did not pay attention to any problem reported. All these factors made One.Tel could not stand in the crisis time.

Major Issues
Major issues face by OneTel is that the company structure was not developed, in which lead to ineffective communication. In its operation, One.Tel run high centralization as the managers only do what Jody told them. He creates the leadership turnover since he liked promoting the yes man and humiliated managers who brought problems to his attention, therefore, there are high staff turnover. He also did not accept any opinions from others and used his authority to manage the company. Furthermore, he focused too much on advertisement in taking in the new customers. He was too autocratic which made the employees unable to exercise their ability in solving problem.
In addition, One.Tel had low complexity that is determined by having unclear job tasks and responsibilities. As there is no organizational chart, the relationship between the employees could not be determined and the job descriptions were ambiguous. Understaffing, which often happens, and many called from customers were left unanswered, led to the long-term decline in sales, as there was frustration among the customers. No rules and procedures in handling account and customers complaint shown that One.Tel was lack of formalization in operation. One.Tel also did not run its divisions’ function properly. There was no right procedure in training staff and it recruited young inexperienced staffs. It also had disorganized billing system and financial account.

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Lastly, there was no clear planning of staff training, advertising, and product availability, which made the technology wasted.

1. Organizational culture
Organizational culture is a system of shared meaning within an organization, which composed beliefs and assumptions (Robbins & Barnwell, 2006). Besides, there are common values that facilitate understanding among members (Robbins & Barnwell, 2006). There are terminal values and instrumental values. Terminal value is the outcomes that want to be obtained. Instrumental value is the degree of formalization to achieve certain desired behavior modes in achieving terminal goals (Robbins & Barnwell, 2006).
There are four forces is sustaining the culture in the company (Robbins & Barnwell, 2006). First, it is selection practices, which is the process of selecting and hiring the best candidates who have the abilities, skills, and knowledge to do the job successfully in the organization. Second, it is actions of top management, which has influence to bring the organization culture. The top management plays an important part in decision making, planning, and controlling the organization. Third, it is socialization, which is the process of the new employee to adapt and learn the organization’s culture, rules, and beliefs, and to socialize with their fellow staff. It can be done by induction courses and training programs. Lastly, it is use of appropriate reward and punishments, which has function to send the powerful message to all the organization’s members.
Some unique characteristics of One.Tel is they tried to build good relationship between the employees. It aimed to make fun and friendly environment for people who are working there. There were all in one partitions without office and organization chart was banned. It tried to create the strong culture of sense of belonging to the company.

2. Size structure relationship
The organizational structure has a major role in daily operation of organization. It facilitates the delegation of authority and operation of control and communication systems (Organisation Structure, 2003). There are different criteria for determine the best structure that suit an organization, include geographic area of operation, the organization’s size and the culture of the organization (Organisation Structure, 2003). It needs to create division of labour and integrate the complexity, formalization, and centralization to ensure the organizational effectiveness. Formalization refers to the degree to which rules, procedure and lines of responsibility are specified (Organisational Structure, 2003). Centralization refers to the degree of authority and decision is at higher levels of the organization Organisational Structure, 2003). Complexity refers to the degree of differences of tasks, jobs, or level in the structure of organization (Organisational Structure, 2003). There are five types of structure, which are the simple structure, machine bureaucracy, professional bureaucracy, divisionalized form, and adhocracy (Shcmidt, 2006). Simple structure, which is used by One.Tel, has high centralization, low vertical differentiation, and low formalization.

3. Henry Mintzberg’s 5 elements
The five basic organizational parts are the strategic apex, the middle line, the operating core, the technostructure, and the support staff (Shcmidt, 2006). The strategic (manager) acts as the brain of the organization, developing visions and strategic goals. The middle line (employee) connects the operating core to the strategic apex. The operating core is all employees who work directly to produce the organization product. The support staff represents staffs that support other part of organization by ensuring they optimize their work (Shcmidt, 2006).

4. Sources of Power
There are 5 sources of power, include coercive power, reward power, legitimate power, expert power, and referent power (Five base of power, 2004). Reward power is the power of promising and granting reward (Five base of power, 2004). Coercive power refers to the power to threat or give the punishment. Legitimate power is the power based on the position in the organization structure. Expert power is the power to share the knowledge and information. Referent power is the power from someone’s personality. The uses of power in One.Tel are in the form of poor leadership, ambiguity task and fear.

Firstly, One.Tel should develop the professional bureaucracy in its structure, which has the standardization in its procedures, high decentralisation and requires high differentiation, especially vertical differentiation (Shcmidt, 2006). Establishing the hierarchies and organization chart equals to establishing the clear communication line and power. A large company needs to have each division with different special responsibilities and task in order to create the efficient and effective functions. When the communication is well developed, the employees’ productivity will increase. Furthermore, a well management system must be developed and implemented properly to ensure that its business plan is able to achieve the desired objectives. It also will eliminate the problem of too fast expansion and other operational and managerial problem. Therefore, it is important for the company to make the detailed planning, discipline the procedures, and do budgeting and account keeping for tracking its financial status. In addition, as the leader, Rich and Keeling should change their attitude in managing the company. They should make the power decentralized in order to keep the task processing and decision making faster. They also must be willing to listen and pay attention to the employees’ report of the company situation and their opinions. Besides, it would be better if Rich and Keeling focus in solving the problem in the organization, rather than making new customers. It is necessary to establish performance based compensation system to encourage and motivate workers to work harder and perform better. Lastly, it should build the detailed strategic plan and business plan, such as to establish the goals, forecast the staff need, guide company to achieve its goals, to gain competitive advantage, and lead company to future direction.

One.Tel was launched in 1995 and it was the Australia’s largest telecommunication company before collapsing in 2001. It established the culture of fun and friendly environment and no hierarchy in its structure, which actually contributed to the One.Tel failure. Besides, there are more problems during One.Tel operation. The leader used autocratic style to manage the company. The company expanses too fast thus the billing system cannot take pace. By the year 2001, the glory on One Tel end as the company had huge debt and there was no cash left to play expenses.
The theories that can be applied and relevant to One.Tel case include organizational culture, size structure relationship, Henry Mintzberg’s five elements and five sources of power. In order to establish good structure, One.Tel should change the structure from simple structure to professional bureaucracy. It needs to have the standardization in its procedures, high decentralization and requires high differentiation, especially vertical differentiation. The business plan and strategic plan should be developed in order to keep track of the organization operation on achieving the desired objectives. Furthermore, the leader requires appreciating the staffs more and establishing the training program. In conclusion, with all the changes in its structure and management style of the leader, One.Tel may be able to solve its problems and do more expansion.

Cook, T., 2001, Collapse of Australia’s fourth largest Telco adds to growing list of corporate failures, International Committee of the Fourth International (ICFI), <>
Five base of power, 2004, Power and Politics, viewed 12 October 2007,
Organisation Structure, 2003, Bnet, Viewed 5 October 2007,
Organisational Structure, 2003, Bnet, viewed 10 October 2007,
Robbins, S.P & Barnwell, N., 2006, Organizational Theory: Concepts and Cases, 5th edn., Pearson Education Australia.
Schmidt, T., 2006, A Review of Structure in Fives; Designing Effective Organisations, viewed 14 October 2007,
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