Classical Management at Telstra - Case Study Example

Name] [Professor Name] [Course] [Date] Executive Summary Telstra is a major Australian telecommunications company that has been ranked as one of the world’s largest telecom companies, based on market capitalization. Its cultural legacy depicts one of a government-owned monopoly that has increasingly adopted a progressive deregulated competitive environment. The company underwent a series of changes over time, to become progressively customer-focused, although its reputation in several market segments has been attributable to poor customer service. In addition, Telstra’s reputation has been dented to an extent that its global dominance was challenged, a dramatic crumple blamed on its classical management structure. This report attempts to examine the classical management and further offers recommendations on ways to improve the situation. Environmental factor to consider while launching into market From the case study, it is evident that telecommunication companies should consider a number of environmental factors prior to coming up with their marketing strategies or launching into newer frontier markets. Cultural environment Culture can be roughly described as the collective programming of the mind that can be identified with members of a certain group of community (Hofstede 1980). Since culture has a major impact on consumer behavior, it is quite arguable that Telstra had to engage researches to study its customer perceptions, preferences or cultural dissimilarities before adopting certain policies that could have been detrimental to its collapse. Understanding the cultural norms is critical in marketing (Usunier & Lee 2009). Telecommunications companies need to be privy to the cultures of their customer base in order to adopt concepts that do not betray their perception of their loyal customers (Hollensen 2007). In addition, the telecom companies must consider the values and attitudes of the countries they operate or intend to operate. The more these shared perceptions and beliefs are implanted into the cultures, the more the companies appeal to their customers (Blackwell et al. 2005). This is because certain societies may place high value on some beliefs and be reluctant to change such as in Australia, the home turf of Telstra. Many bureaucrats are of the opinion that consuming foreign products is being disloyal to the country. The same case applies in Japan (Czinkota & Ronkainen 2007). Economic environment It is also imperative that manager take into consideration the economic factors before launching their telecommunications companies into new markets (Hollensen 2007). These economic factors such as the population statistics and make up offer a basic indication on the curativeness of the market with regard to size and potential of growth. Factors to be examined here may include age distribution, life expectancy, gender balance, income levels and so forth. Managers can use such date in establishing segments and the areas they should focus on (Czinkota & Ronkainen, 2007). Competition On review of the case study, it is crucial that telecom companies must look into the competitiveness of the targeted markets before launching into the market, if they have to avoid making fatal mistake. One way of ensuring this is via SWOT analysis (SWOT -- strengths, weaknesses, opportunities, threats), in which case the companies can study their own strengths and weaknesses and those of the potential competitors and afterwards implement superior strategies such as better customer service or quality services. This represents an area that Telstra seems to have erred. Technology From the case study, it is also obvious that telecom companies need to look into technology. Technology is an environmental factor that has the potential to affect their performances in the new markets. Technically, all telecommunications services have a life cycle, which include launch phase, growth phase, maturity phase and decline phase. Telecommunication products often reach the decline phase once new technologies are launched (Frank 1984). As a result, telecom companies must decide whether to introduce new technologies or maintain production of older products. Telstra regarded this area when it invested $300 million in upgrading coaxical cables in delivery of cable television (Bradley 1999). Political framework and regulations This kind of environment in a host country or homeland is a major factor the telecom companies must consider when launching into markets (Hollensen, 2007). Managers need to take into account the regulations so to avoid overstepping on the authority, as in some instances, government can force the telecom companies to adopt some policies that may not be in line with the company’s policies, while other may benefit the company. For instance, in the late 1990s, the Australian government publicly floated old copper wire telephone system that was initially built by taxpayers’ money, raising some $14 billion in the process. Plans to take into consideration as Telstra manager On review of the case study, it can be deduced that Telstra’s problems were basically caused by the management. For instance, the company’s assets once privatized in the late 1990s, when the Australian government publicly floated old copper wire telephone system, that was initially built by taxpayers’ money raising some $14 billion in the process, the company started to operate largely as a monopoly. Additionally, Telstra began to block competitors from accessing the network, which showed Telstra management had the objective of controlling the market. This kind of classical management bent on controlling others signifies a monopoly operation and may cause many problems to the firm such as decline in quality services (William, 1992). In my view, I would have campaigned for a free market to allow for competition, as it triggers high quality. Telstra further used $300 million to upgrade network while looking to have all providers use the network, this was rather a lack of foresight and showed the company’s tendency to focus on short-term projects while maximizing return on investment. This is proof that the company had adopted classical model of management (Usunier 2009). In my case, I would have adopted paradigm management models, as it tends to focus on value addition and appeal to customers. This would ensure that Telstra consolidates its customer base rather than just controlling others as customer is king. The model would also lead to long-term benefits in addition to improving the organization’s expansion strategy (Blackwell et al, 2000). For instance, since Telstra has concentrated on controlling others, instead of separating into two, as it was the best idea then, it overlooked the decision, which later proved it has made a wrong call. I would also take into consideration cultural audit when planning for a cultural change. The significance of this is that it would enable the overall administrative unit of the company to have a deep insight into the cultures whose market we seek to explore, as well as build public relationships that could ensure an appeal. It will also reduce or eliminate risk of resistance to our products or change of products, as well as identify areas in which we would need to change to accommodate the preferences of the potential customers (Czinkota & Ronkainen 2007). Contingency Planning in external markets As businesses are prone to face risks from external markets, the primary means of managing the risk I would go for is the contingency planning, which involves assuming a substitute course of action when the risks show up. Literary, it means having a backup plan or plan “B” in the event of risks, when the original plan cannot work. With regard to Telstra, it has no back up plan incase its monopoly ambition failed, otherwise if it has, it could have assumed a new product or service that would have face no stiff competition for the time being as it explored other options. In this case, if stiff competition would arise, as it did, and if it had a backup plan, it would have concentrated on a more competitive product while repositioning itself in the market. A key element of contingency plan that makes it even more appealing is the ability to have foresight or identify potential risks. One way of doing this is by making a company business plan and making assumptions on alternative courses of action that could be taken in case other plans failed. Values of participatory planning There would be no significant value in participatory planning, which is defined as a public utility development-planning paradigm that stresses on involvement of an organization’s strategic management processes and the government or community. It is important to note that this kind of a model has the tendency to interfere with the management of the company, as the different groups have different interests that may not tally with the health of the company. For instances, the decision by the Australian government to publicly float old copper wire telephone system that was initially built by taxpayers money, raising some $14 billion in the process, though it seemed well-intentioned, heralded the beginning of the company’s fall as it was the start of monopoly. Experts have argued that companies tend to perform well when their managements are independent (Bell & Crick 2004). Bibliography Blackwell, R, Miniard, P & Engel, J 2000, Consumer Behaviour, Thomson-South Western, London. Bell, J & Crick, D 2004, Small firm internationalization and Business strategy, International Business Journal, Vol. 22. (1) 23-56 Benos, E & Weisbach, M 2004, Private Benefits and Cross-Listings in the United States, Emerging Markets Review 5, 217-240 Bradley, F1999, International Marketing Strategy, Prentice Hall, London. Czinkota, MR & Ronkainen, IA 2007, International Marketing, Thomson-South Western London. Frank, V 1984, Living with price control aboard. Harvard Business Review, Vol. 62, March-April, 137-142. Hall, ET, 1976, Beyond Culture. Anchor Press, Doubleday. Hollensen, S 2007, Global Marketing: A Decision-Oriented Approach, Prentice Hall, London. Usunier, J 2009, Marketing Across Cultures, Prentice Hall, London. Yin, R 2003, Case Study Research: Design & Methods, 3rd ed, Sage Publications Inc, Thousand Oaks. Read More