SCENARIO: GLOBAL COMMUNICATIONS
COMPANY OVERVIEW
On Wall Street, confidence in the telecommunications industry is waning. Stockholders are bemoaning diminishing returns and speculating about the industry’s ability to rebound. Understandably, telecommunications companies are under tremendous economic pressure and Global Communications is no exception. Three years ago, its stock traded at $28 per share; today, the stock is valued at $11, more than a 50 percent depreciation.
The problem is obvious: Too much competition. Local, long-distance and international markets are all competing for the same business. New calling features and suites of local and long-distance services helped, but the industry suffered a huge blow at the hands of the cable companies, who stepped in to provide complete solutions encompassing computers, televisions and plain old telephone service (POT). Selecting and entering international markets yielded mixed results.
To pump up the volume, the Global Communications senior leadership team has developed a two-pronged aggressive approach. First, they plan to realize growth through the introduction of new services, primarily to its small business and consumer customers, who will now be served in both local and long-distance markets across the country. To compete with the local telephone and cable companies, Global has created alliances with a satellite provider to offer video services as well as a satellite version of broadband. Partnership with a wireless provider will allow the small business owner anytime Internet access using wireless telephone or PC cards. Even company information hosted in mainframes can be accessed remotely.
Second, the senior team has identified cost-cutting measures that will improve profitability. To maximize bot ...