Business Management Analysis of TEOCO Company - Essay Example

BUSINESS Introduction In the recent past, companies have been reported to undergo challenges because of lack of the knowledge on the business environment.TEOCO company is not an Excemption.The Company started in 1994 as Strategic Technology Group (STG), and later changed to TEOCO in 1998.Though the company stated as consultancy for IT projects, it has shifted to focusing on the telecommunications industry. The company is headed by Mr.Atul who is the founder. The company currently provides specialized software for the telecommunications industry. The company which started humbly in India has become one of the fastest growing businesses in the telecom software industry. However; the company development has gone unnoticed due to poor marketing strategies. The company has avoided external capital for 15 years and it has also developed a fear of venture capital and this has prevented it to rise in profitability for long. The company recently partnered with which has strengthened TEOCO without changing the culture of our organization. This paper therefore seeks to analyze the business environment and strategies of TEOCO Company analyzing various factors that contribute to its success. Analysis of TEOCO Company External forces and industry conditions Over the years there have been external forces and industry conditions that have contributed to its performance. The external forces that include competition have affected the company’s performance to a greater level. This competitors Vibrant and Broad margin have been at the forefront in the provision of the same products. The competitors had low prices and this gave TEOCO Company really tough time to make profits and this affected the performance. The company conditions also affected the company performance at a greater extent. There has been a partnership agreement with TA Associates. The firm had made a minority equity investment of $60 million in TEOCO.This has boosted the capital base of the TEOCO company which was at the verge of collapsing. This has enabled the company to further increase its profitability. TA Associates which is the largest private equity firms in the country, managing more than $16 billion in capital by 2009, had an impressive network of relationships. This is important in the growth of TEOCO which tend to enjoy the free marketing of their services. The partnering company has also extensive knowledge of the industry. This enables TEOCO to be able to develop the products that are needed in the market. This enables the company to be able to meet the demand of the of the current market through having a shared knowledge of the market. There was inappropriate management, the TEOCO company opened entities such as netgenShopper.com for online auctions; Eventrix, an event planning portal; and AppreciateYou.com to support employee retention. These entities were allowed to function as separate entities, each at their own location, with their own business goals and core values, managed by different managers; at the same time, they each relied on TEOCOs cash flow for their development. Ordinarily, the entities should be having the same goal and management since they emanate from one Mother Company. This is to ensure that the overall goal of the company is met. It is important to note that since this entities source capital from the mother company they were entitled to the same management and core values. Internal organization and culture The internal organization and culture at TEOCO influence its performance in various way. Firstly; the company has a culture of fear for the venture capital. Ordinarily, Venture Capital firms usually close deals and get their investment back within three to five years. The venture capitalist got their returns leaving the company in liquidity. This affected the performance of the company.However,the company should not fear for venture capital funding is not a loan scheme, there is no repay schedule though one is obliged to pay; which means one does not have to repay debt as a cost of doing business. (Martins, 2009) The internal organization of the company also contributes to the performance of the company. The company has improved its services and developed new products. The development of new products leads to product diversification which often increases the market target. The research is vital for any organization to enhance its product features so as to be on the competitive advantage. In 2004, research and development efforts resulted in the patented Trek technology which increased the performance of the company. The company also decides to migrate from software licensing to provisions of lucrative software. Instead of a fixed licensing fee, the company charged a recurring monthly fee based on the volume of data processed for each client and this has increased its performance significantly. Strategies for competition TEOCO has strategically responded to its competitive environment and internal capabilities. The company has a strategy of focusing on all the niche markets significantly. This includes all the small and big customers. The big companies are not bothered by the small niche products for telecom carriers. This therefore enables TEOCO Company to be on the competitive advantage. The company has put strategically a primary focus of the company to North American telecom carriers. This segment is considered to have a lot of customers and therefore more sales. However, with the anticipated consolidation of the telecom industry in North America, TEOCO needed to focus on international expansion. (Murphy, 2009) The TEOCO Company has strategically entered into the global business support system and operations support system market. This is vital because TEOCO could find itself in competition with much larger players, and it would be valuable to have a strong financial partner so as to increase the profitability of the company. The company also took a conscious decision not to accept venture capital because it numbs the entrepreneur’s competitive advantage. The company has strategically, improved its services and developed new products. In 2004, research and development efforts resulted in the patented Trek technology. Atuls management Atuls management also contributed to the effectiveness of the company. He had a weakness of not cultivating a relationship with potential external investors; he had remained reluctant with his business beliefs that an alliance with external financiers was in the best interest of a company and its employees and therefore could not support partnership. However he come into the understanding of the benefits of partnering.Atul also has uneasy feeling that normally comes with making vital decisions. This is because of insufficient information of the industry.Atul also had some strength that enabled him to be effective in the company. Ordinarily, partnering with the right investor was a worthy endeavor. (Porter, 2008) Investment and recommendation When the TA invests in the TEOCO Company it means that the investing company has Shearson the company. More than 50% of the share calls for direct control by the investing company. However, TA has invested $ 60 million which is a fraction of the capital. In addition, TA executives had remained adamant that Atul remain in charge and continue as the controlling shareholder. The fund would appoint two board members to monitor the management of the fund. However, TEOCOs current management team would continue to lead the company.TEOCO company should not allow TA to have management lead by preventing them to own 50% of the shares. The company will encounter management issues when incorporating TTI with TEOCO culture. The employees from both sides will not be ready to adopt culture from both sides. This is because both companies have different cultures and bringing certain culture from company to company may bring problems towards the workers. There should be seminar for the members to agree and blend the cultures. The company may face challenges of cash flow and financial consolidation. There should be agreement by the board of directors on the issues of financing and distribution of shares. (Murphy, 2009) Works Cited Martins, T. (2009). venture capital. Retrieved 2015, fro m http://www.mytopbusinessideas.com/advantages-venture-capital/ Murphy, M. (2009). Business management. Prentice Hall. Porter, M. (2008). Competitive Strategy: Techniques for Analyzing Industries and Competitors . Mc-Gill Hall. Read More