Organisational Structure and Effectiveness at Optus Telecommunication Company - Case Study Example

INTRODUCTION OPTUS Telecommunication Company is considered to be the second largest telecommunication company in Australia and a subsidiary of Singapore Telecommunications after its acquisition with SingTel a biggest Singaporean telecommunication company. The company which has its headquarters in Sydney (New South Wales), of Australia it provides a wide variety of integrated communications services to diverse customers across the globe and primarily the company operates through two business segments thus Mobile, and Fixed. Optus company today deals in a wide range of products including mobile, voice, data, Wi-Fi, long distance telephone, internet, and satellite and subscription television services. In addition, the company provides other services such as voice over internet protocol (VoIP), voice over DSL and other transmission solutions (Business Monitor ,2008,pp.3-28). The company offers its services to various individuals including residential, small as well as medium business customers and even the government of Australia. Optus Telecommunication Company owes its foundations to the privatization of the AUSSAT Company in the year 1981. This step was seen as an offering to the general public that would assist the company in making distant calls at a cheaper rate as compared to other existing companies such as Telstra (Business Monitor ,2008,pp.3-28).This is also the first step in the formation of the government owned Telecommunication Company AUSSA Pty Limited. In the following year the government owned company took a step in the improvement of its services by acquiring 376 satellites as the initial boosters from the Hughes and used as the public television delivering services and satellite communication in the rural communities. In the past, the public used to make long distant calls and then the phone number which was mainly regulated by the AUSTEL Company. The year 1991 saw OPTUS win a tender for the second general telecommunications carrier license. Since commencing its operations after the purchase the company has established a telecommunications network that incorporates 3 key components that is satellite, wireline and mobile which are responsible for delivering services across the Australian states(Business Monitor ,2008,pp.3-28). The company’s services incorporates local telecommunications services as well as mobile communication services, domestic calls, business network services to both businesses and homes, and pay television. The satellites owned by the company extend their services to other countries such as Cocos Island, Hawaii, Christmas Island and Asia amongst others. Just like any other big enterprise, OPTUS has a vision and a mission that has developed a clear set of values for identifying it as it aspires to become Optus Industry Development Plan((Optus company reports accessed on 24th May from: www.optus.com.a) ). OPTUS Telecommunications Company has a vision of being innovative, world class communication company capable of high growth while assisting others and their enterprises to succeed with quality OPTUS solutions and services delivered by what is considered to be the most capable and loyal workforce in the entire state of Australia. On the other hand, the company’s main objective and mission is to become the customer-focused leader in as far as data and online communication services and solutions and provision of voice and data is concerned while in the process achieving the highest standards in Australia ensuring customer, employee and shareholder satisfaction (Business Monitor ,2008,pp.3-28).. Additionally, OPTUS Telecommunications Company has taken up the responsibility of applying some of the world’s most advanced technology as a means of helping Australian citizens communicate with each other as well as the rest of the world in a reliable, simple and cost effective manner. The government owned Telecommunication Company was not considered effective in its initial operations and thus decided to regulate the telecommunication in Australia, which was then initiated through the sale of AUSSAT Company. Privatization process resulted in AUSSAT becoming OPTUS and maintained a competitive edge with Telstra Telecommunication Company. Optus company is one of the Australian telecommunication companies associated with various attributes among them a challenger, nimble and innovative company bringing innovation to the marketplace. The company since its acquisition it has been working on challenges by calculating risks, breaking new ground and ultimately finding new ways to meet customer needs Business Monitor ,2008,pp.3-28).Optus Company being a large company not only in Australia but to other markets in the world especially to Singapore where its SingTel parent is situated, the company values the importance of both internal and external communication (Optus company reports accessed on 24th May from: www.optus.com.a) Current Company’s Situation Organizational structure is a term which refers to organizational pattern and structure of activities such as task allocation, coordination and supervision directed towards the achievement of organizational aims. Organizational structure is a viewing glass through which various individuals see their organization and its environment (Alvesson, 1995, pp.83-98). Primarily, an organizational structure is a composition of departments and divisions within a specific management hierarchy hence in most cases it tends to provide a set of rules, procedures, responsibilities, processes and goals for each department, branch, workgroup and specific individuals in the organization (Sachdeva,2003,pp.67-78). In addition, it establishes patterns for departmental operations and reporting guidance. In most cases therefore an organizational structure tends to provide a foundation on which standard operating procedures and routines rest. Secondly, it determines how various individuals in the organization get to participate in the overall organizational decision making processes and to what extent do their views shape the organization’s action. Optus Company after its acquisition had the advantage of being a new enterprise (Bateman & Snell, 2004,pp.13).According to the report tabled by Optus manager the acquisition of the company by SingTel caused organizational restructuring hence there was need for the company to start from scratch, quickly gain growth as well as run more quickly. The company adopted the functional organizational structure which is a kind of organizational structure in which various organizational activities and tasks are divided into specific departments which each department being headed by an individual manager (Du Brin,2008,pp.265-280). Under this kind of organizational structure decision making process is usually centralized hence it involves top- down decision making process though communication is not strictly top –down unlike the decision making process (Bingemann,, 2008,pp.45-56). Over the years, Optus Company has used functional organizational structure which has led to its current growth and tremendous achievement. Using this kind of organizational structure the decision making process in the company is based on centralized decision making mode thus most of the decisions are made by the top managers after which are communicated to low level employees (Bingemann,,2008,pp.45-56). . This has proved to be advantageous for the company in the sense that the upper management is in control of the organization a tool which has led to the current tremendous growth of Optus Company. This kind of organizational structure over the years has led to the empowerment of Optus Company employees as well as creating an opportunity for them develop in their career paths apart from company development and success. Primarily, the functional organizational structure of Optus Company has motivated employees to move upward within the organization assuming many of the decision making processes as well as positions. The use of Functional organizational structure has over the year’s fostered stability and efficiency within various departments. Using the functional organizational structure the company has over the years tried to foster cross- functional interaction with the organization establishing open plan office for managers where the decision making process is centralized (Bingemann,,2008,pp.45-56). The company today has a set of corporate divisions established to support the entire business. Optus Company Corporate divisions consist of Corporate Marketing, Group Finance, and Corporate and Regulatory Affairs, which includes Internal Communications and Legal. Optus Company has established a corporate Affairs team whose function is to fulfill the corporate communication function for Opus as a whole. Primarily, the Corporate Affairs deals with public relations and the media (Optus company reports accessed on 24th May from: www.optus.com.a) Moreover, the Corporate Affairs is judged with the responsibility of working with market and media research and employee feedback statistics. Optus Company has a legal service to support its commercial divisions, technical as well as corporate areas. The legal department is concerned with negotiating customer contracts, dealing with trade practices issues, and managing any litigation in which Optus is involved(Business Monitor ,2008,pp.3-28). Since telecommunication industry in Australia actually operates within a specific complex regulatory framework and environment, the company has in place a regulatory team different from the legal team whose function is to proactively manage the broad range of issues that arise and ensure compliance Challenges and problems Under the functional organizational structure especially for a larger company such as Optus, there are many levels of management between the baseline staff and the top-level management which has affected the decision making process as compared to the previous flat organizational structure (Koontz & O'Donnell,2008,pp.34-69). Since Optus Company is currently a subsidiary company of SingTel which is its parent company, before any decision can be made it requires the Chief executive officer based in Australia to consult with SingTel something which in specific situations leads to delays in decision making process. Though, the company is doing well in business and has experienced a tremendous growth over the last years many, decision making process in some circumstances require to go through a particular given process at each level resulting in delays for specific services(Business Monitor ,2008,pp.3-28). Initially when Optus Company was using a flat organizational structure there were no many chains of command hence decision making process was an easy and straight forward process with no delays. In addition, the use of functional organizational structure has made the organizational activities more complex with many chains of command and levels of management compared to prior when the company was using flat kind of organizational structure (Pride Hughes & Kapoor,2009,pp.189-200). Given the mere fact the company has to restructure from flat organizational structure where there is no middle level management to functional organizational structure that includes middle management positions it meant increasing the company’s budget(Business Monitor ,2008,pp.3-28).. Though, the company over the years has been doing well delayed decision making processes and poor communication as well as information, the company currently is facing payment problems with its new TV venture resulting from the recent losses that the company incurred. In the month of February the company incurred a loss of $ 83.6 million as a result of its TV operations restructuring some thing which forced the company to compensate for the losses from the extra profits generated from the mobile market(Business Monitor ,2008,pp.3-28). Functional organizational structures are usually associated with of poor communication across the groups as well as slow response to changes in the environment which today also key challenges facing Optus Company especially in the competitive Australian Telecommunication environment (Spector, 2007, pp.3). Since functional organization structures usually results to narrowed perspectives among various employees due to the separateness of different department work groups, this issue has proved to be a challenge to Optus Company with departmental managers finding it hard to relate with other departments such as marketing (Spector, 2007, pp.3). This has led to reduction in overall employee and departmental cooperation as well as communication. Structural and organizational changes Prior to its acquisition Optus Company had put in place a flat kind of organizational structure which had fewer levels of management between the executive levels and the front-line employees. Through, this kind of organizational structure Optus Company empowered its employees by involving them in the overall organizational decision making process which saw the company grow more tremendously. Using the flat kind of organizational structure bureaucracies in the organization were minimized which was one of the significant reasons behind Optus growth in the competitive environment (Katz and Kahn, 2009,pp.45-68). Though, the company did not achieve greater success as its today after restructuring its organizational structures as a result of its acquisition company did quiet well under this kind of organizational structure. Communication in between upper manager and the lower level employees was much easier a situation which made employees more productive (Jablin & Putnam, 2000,pp.446).. Optus adopted the relatively flat organizational structure unlike the more traditional bureaucracies. Given the mere fact that the company was just starting there was need for top executive managers to interact with the low level staff through an open culture. The office design culture encourages the flow of information and communication between departments. Without a tradition of demarcations and given the explicit efforts from the outset to promote communication flow between the departments and the relatively small size of the organization there is easier communication flow between the functions at Optus. This organizational structure was developed primarily as way of providing functional focus and specific project management capability (Business Monitor ,2008,pp.3-28). In addition, this approach was meant to help the company establish a market share more quickly. After its acquisition, there was need for Optus Company to adopt organizational structure designed to make Optus company closer to the customer and to combat the customer perception about the decision the company had made remotely. Operating in the competitive telecommunication company in Australia as well as being a subsidiary of Singapore Telecommunications thus SingTel, Optus had to restructure its organizational structure to achieve high performance standards as well as actively seek opportunities for individual employee improvement as well as professional growth (Business Monitor ,2008,pp.3-28). In addition, there was need for Optus Company to tailor its corporate structure to meet the perceived need of the market after acquisition. Initially, Optus Company had adopted the flat organizational structure since it was just a small company which according to research flat organizational structure is meant for smaller where it’s possible to decentralize some decisions while maintaining corporate integrity. After its acquisition the company gained tremendous growth becoming the second Australian largest telecommunication company with its branches all over Australia. It become difficult for Optus Company to continue using the flat kind of organizational structure since many managers found themselves having loss of control functions a situation which prompted the company to restructure its organizational structure and implement functional kind of organizational structure (Business Monitor ,2008,pp.3-28). Optus adopted the functional organizational structure in which the company divided its organizational activities into different corporate entities and departments. Under the functional departments, employees in the company have been allocated to various departments closely related to their skills and responsibilities resulting into overall organizational efficiency. Current performance/productivity and effectiveness Using this organizational structure Optus Company was able to develop a corporate culture based on customer satisfactions .This was meant to promote the idea that all the Optus employees and strategic partners are customer service people. The current functional organizational structure in place allows Optus Company to work together with its divisions in Australia as well as SingTel which is its parent company. The current functional organizational structure value the contribution of each team and member by encouraging open as well as honest discussions. With the change of its organizational structure after merging with SingTel today Optus has become the largest second Australian company in telecommunication owning 11% of the country’s telecoms market .Due to its tremendous growth , the company has become the biggest rival to incumbent telecoms giant Telstra which actually is three times Optus size. Optus has brought genuine competition in the Australia telecommunication market by bring prices down. The company has achieved tremendous growth in the business by having additional network infrastructure with the company currently having network lease services from Telstra making it ironically one of Telstra's biggest customers. In addition, the Company today owns a number of other brands such as Virgin Mobile Australia and Boost Mobile. With the effective organizational structures in place after its acquisition by SingTel, the company in the year 1998 bought up one of the Australia’s earliest ISPs,and Microplex to enable the company provide dial-up internet services. The company has since continued to introduce new products in the market as well as innovative services. After the introduction of new internet services in the year 1998, the company in the year 1999, introduced cable broadband services, after which in the year 2004 the company too introduced ADSL2+. Through its, OptusNet brand, the company today offers a variety of dial-up internet as well as other broadband services through ADSL and satellite. The company has grown tremendously currently its one of the five Australian ISPs which offers cable broadband in a limited number of cities such as Sydney, Melbourne and Brisbane. Compared to its competitors, the company today offers wireless broadband occupying 96% of the entirely 3G network coverage. Though, the company is small compared to its rival Telstra the company has continuous maintained a top position in the competitive telecommunication industry in Australia with the company recently announcing its plans to upgrade its three-city east coast cable network for a fraction of the price of Telstra's $300 million Melbourne upgrade. The company today serves more than six million customers each day and it has grown to offering a wide range of telecommunication services as well as products including mobile, local, national and long distance telephony, business network services, internet and satellite services and subscription Television. Optus Company is customer based hence everything done in the company is centered on the customer’s needs. Working on the principle of customer focus, Optus Company has over the years strived to connect people through easy technology accessibility. Due to the nature of telecommunication market in Australia, maintaining the quality of service does not only require innovative products and pricing but a commitment to treating each customer with respect hence after its acquisition there was need for Optus company to restructure its organizational structure to factor in SingTel. Conclusions and Recommendations Organizational effectiveness is one of the fundamental goals that each and every organization strives to achieve today due to the competitive nature of telecommunication industry in Australia as well as in other parts of the world. To be effective and achieve its goals, Optus Company should successfully respond to environmental factors through the development of various organizational effectiveness models (Madura, 2006, pp.279-300). Optus Company should focus on the organizational internal as well as external activities and factors that have a significant influence on it. The second organizational dimension which Optus Company should consider integrating in its organization is aspect of flexibility versus control (Agarwal, 2009,pp.183-198). Flexibility in organization tends to allow faster change on other hand control allows a firmer grasp on current operations. Optus company being one of the leading telecommunication companies in Australia it should consider overall organizational realignment in relation to the overall objectives, products and services through the integration of a strategic renewal process. In addition, Optus Company should establish employee feedback process as well as establish policies which stimulate employee innovative ideas. The company though has achieved tremendous growth it still faces some problems when it comes to decision making process in manner that some decisions have been delayed making the company to incur certain loses as well as encounter problems with its network. In relation to this the company’s Total Quality Management (TQM) program and strategy committee should implement programs which empower employees to make decisions and use their own intelligence. Using this kind of programs lower level management employees will have an opportunity to identify, diagnose quality problems and take corrective actions without going through the management hierarchy (Gitman & McDaniel,2008,pp.179-226).The company should encourage individual employee participation by recognizing employee accomplishments and providing continuous feedback. Implementing participative organizational structure will improve overall TQM outcomes as well as flexibility in decision making process. The company should integrate divisional structure which will allow managers in between the departments to better focus on their resources and results. Integrating of divisional structure in the organization will increase overall performance of the company, increase flexibility as well as responsive to change (Thompson & Strickland, 2003, pp.129). References Agarwal, R., D (2009). Organization and management. New York: Tata McGraw-Hill Education,pp.183-198 Alvesson,M (1995). Management of knowledge-intensive companies, vol 61.Chicago: Walter de Gruyter,pp.83-98 Bateman, T.S. & Snell, S., (2004), Management: The New Competitive Landscape, 6th ed., McGraw-Hill, p. 13. Bingemann, M (October,2008) Optus restructure to cut 115 jobs.Publisher:Australian Press, pp.45-56 Business Monitor (2008).SingTel Optus Company Report 2008. Market Research Report. Publisher: Mc-Graw Hill, pp.3-28 Du Brin, A., J (2008). Essentials of Management.8th ed. Publisher: Cengage Learning, pp.265- 280 Gitman, L J & McDaniel, C (2008). The Future of Business: The Essentials.4th ed. 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Thompson, A. & Strickland, A., (2003), Strategic Management Concepts and Cases, 13th ed., McGraw-Hill Irwin,pp.129 Read More