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Essay: British telecommunication company

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British telecommunication company

1.0 EXECUTIVE SUMMARY

This report consists of a detailed analysis of British Telecommunication Company, which includes a detailed research in analysis of a series of management methodologies and suggestions given in the management methodologies which should applied in BT for promoting better quality of products and services towards their customers.

Globalization issues, Total Quality Management and E-commerce had been taking consideration as important issues which could be benefit and facilitate BT to maintain their businesses level and retain their loyalty customers. A comparison between BT and Virgin Media had been conducted and finally recommendations had been suggested for BT’s in their future improvements and sharpen their competitive advantages within the competitive market.

2.0 INTRODUCTION

British Telecommunication (BT) is the largest and biggest telecommunication provider in the UK. It was privatized in 1984 and now operates in more than 170 countries around the world. BT’s main activities include networked IT services, local, national and international telecommunication services. They also provide broadband internet service. In addition, BT is the official communications service partner for the Olympics and Paralympic Games in London 2012.

2.1 Background of BT

BT is one of the oldest telecommunication companies in the world. Its origins date back to the establishment of the first telecommunication companies in the UK. Among them was the first charitable telegraph service, The Electric Telegraph Company established in 1846. As all of these companies were merged or collapsed, the survivors were finally transferred to state control manage under the Post Office. In 1977 the Carter Committee Report suggested a further partition of the two main services and for their replacement under two individual corporations. The result enclosed in the report lead to the renaming of Post Office Telecommunication as British Telecom in 1980, although at that time it was still part of the Post Office. British Telecommunications Act 1981 bring some changes such as take the responsibility from Post Office providing telecommunication services and making two separate corporations. In this way, the act bounds the Secretary of State for Trade and Industry, as well BT to license other operators to run telecommunication systems. In 1982 Government sell more than 51% shares of the company to private sector and by 1984 British Telecom was privatized. The same year British Telecom sold more than 50% shares to the public sector.

2.2 Key Aim s of BT

One of the key aims of BT is to emphasise and improve on the quality aspects and provide good customer service. BT is very keen to helping its customer. Ian Livingston, the CEO of BT has said that they would make life simpler and better for their customer by offering great value services tailored to their needs. In this sense BT wants to establish a long run relationship with their customers by doing this they want to understand the problems of their customers and try to help them out in the best possible manner. Sir Mike Rake, the chairman of BT have stated that they are aimed to achieve their goals and look for a consistent and principles based approach to regulation in the UK, the EU and worldwide. BT wants a good, flexible and brilliant system to make sure to provide the best communication services to meet the customers’ requirements in the coming years. BT as the leading telecommunication company has a very clear image where they have to be and what they have to do for the future achievements and success. BT intends to develop good customer experience and ease the cost transformation of BT.

2.3Flexibility of BT’s Product and Services

BT offers their customers a wide range of products and services to use at homes and businesses. The list of products and services they provide are as follow: (BT plc, 2008)

2.3.1 Phone

2.3.2 Broadband

2.3.3 Television

2.3.4 Bundles

2.3.5 Mobile

2.3.6 Internet Services

2.3.7 BT Credit Card

2.3.8 BT Shop

More details on these products and services listed above are in Appendix 1.

3.0ACADEMIC LITERATURE

3.1 Globalisation

According to Hill (2008), globalisation refers to the shift toward a more integrated and interdependent world economy. Globalization has several facets, including the globalization of markets and the globalization of production.

“A fundamental shift is occurring in the world of economy. We are moving away from a world in which national economies were relatively self-contained entities, isolated from each other by barriers to cross-border-trade and investment; by distance, time zones, and language; and by national differences in government regulation, culture, and business systems. And we are moving toward a world in which barriers to cross-border trade and investment are declining; perceived distance is shrinking due to advances in transportation and telecommunications technology; material culture is starting to look similar the world over; and national economies are merging into an interdependent, integrated global economic system. The process by which this is occurring is commonly referred to as globalization.” (Hill, 2008, p.5)

“The globalization of business has placed a premium on information. A domestic company focuses its attention on the political and economic developments of a single nation. A global company must understand what is going on in a hundred or more nations. A domestic company intimately knows its local competitors. A global company has far more competitors to worry about. Most executives are too busy performing their internal roles within a company to read every newspaper and annual report to keep themside by side on what is going in the external business environment.” (Feist, 1999, p.6)

3.2 Supply Chain

“A supply chain refers to the flow of materials, information, payments, and services from raw material suppliers, through factories and warehouses, to the end customers. A supply chain also includes the organizations and processes that create and deliver products, information, and services to the end customers. It includes many tasks such as purchasing, payment flow, materials handling, production planning and control, logistics and warehousing inventory control, and distribution and delivery.” (Turban, 2006, p.242)

The objective of every supply chain should be to maximize the overall value generated. The value a supply chain generates is the difference between what the final product is worth to the customer and the costs the supply chain incurs in filling the customer’s request. For most commercial supply chains, value will be strongly correlated with supply chain profitability, the difference between the revenue generated from the customer and the overall cost across the supply chain.

3.3 Competitive Environment

O’brien (2006,p.46) suggests that the constant struggle to achieve a measurable competitive advantage in an industry or marketplace occupies a significant portion of an organization’s time and money. Creative and innovative marketing, research and development, and process reengineering, among many other activities, are used to gain that elusive and sometimes indescribable competitive advantage over rival firms.

3.4 PEST Analysis

3.4.1 Political

Political scientists and analysts conduct formal risk assessments on political change within regions or countries. Such analyses also map out the key political constituencies, central and regional agencies, key ministers and bureaucrats as well as changing forms of legislation in different countries as an input into MNE strategy and implementation.

3.4.2 Economic

Economic analyses cover everything from national-level to industry-sector or market-specific trends. Companies compiling return-on-investment (ROI) projections need to know something about productivity levels that can be expected in would-be-plants, encompassing data on employees, technologies, support industries, local utilities, and so on.

3. 4.3 Social

Social trends analyses are relevant for firms looking to market new products and services in new countries. Mapping patterns of disposable income, customer preferences, and regional differences in these requires a combination of quantitative and qualitative analyses.

3. 4. 4 Technological

A firm may have to relinquish proprietary technology if it turns over some of its component manufacturing to offshore suppliers or if suppliers need the firm’s technology to achieve desired quality and cost goals. Political risks may also be involved. Each nation can exercise its sovereignty over the people and property within its borders. The extreme case is nationalization, in which a government may take over a firm’s assets without paying compensation. Further, a firm may actually alienate customers back home if jobs are lost to offshore operations.

3.5 Five Forces Model

Porter (1980) developed a model that allows business to analyse competitive forces in an industry in order to identity opportunities and threats. These forces are shown in the figure below:

The Stronger each of these force is, the less able a business is to raise prices and profits.

3.6 JIT & Lean Manufacturing/ Resource Requirement Planning

APICS dictionary (2008) defined Just-in-time (JIT) as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”.Just in time also known as lean production and stockless production which indicated that the production need to be produced at the right part in the right place at the right time. Just in time system is used to ensure that through the process of productions, it is not allow for any unnecessary activity which adding production costs without adding value towards the products. This could be excess inventory which stored for long period or selected wrong production methods which causing rework of the products.

JIT/ Lean concepts are now widely used by many organization, applying JIT methodologies, it should help to “improve profits and return on investment by reducing inventory levels, increasing the inventory turnover rate, reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs, such as those associated with machine setup and equipment breakdown.” Also, “JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again.” (Schonberger, 2006)

3.7 Total Quality Management

“Total Quality is a description of the culture, attitude and organization of a company that aims to provide, and continue to provide, its customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company’s operations, with things being done right first time, and defects and waste eradicated from operations.” (Stark, 1998)

TQM includes:

l Customer driven quality

In a TQM organization, customer’s need and satisfaction will always put in the first priority, and it is believes that to be successful in an organization is to provide the best quality of products and services to maintain customer’s satisfaction.

l TQM leadership from top management

It is believed that to be success in TQM organization, the top management will need to commit and lead their employees through the company’s objective and achieving those goals using the right methods to guild all quality activities and encourage participation from all employees.

l Continuous improvement

The main purpose of TQM is about continuous improvement of all operations and activities within the organization and production line. To maintain a high level of consumer’s satisfaction, simultaneously the improvement of high quality products and services will need to be maintained. On the other hand, it seems improvement of high quality products relating to improvement of process quality.

l Fast response

In order to maintain customer’s satisfaction, the company will need to have a fast respond in customer’s need and wants, therefore TQM organization need to apply to short product and services life cycle.

l Actions based on facts

“The statistical analysis of engineering and manufacturing facts is an important part of TQM. Facts and analysis provide the basis for planning, review and performance tracking, improvement of operations, and comparison of performance with competitors.” (Stark, 1998)

l Employee participation

Education and training will given to all employees in quality improvement activities, a successful TQM working environment requires commitment and participation from all employees to “take more responsibility, communicate more effectively, act creatively, and innovate. As people behave the way they are measured and remunerated, TQM links remuneration to customer satisfaction metrics.” (Stark, 1998)

l TQM culture

TQM needed to introduce cooperative culture by the management team within the organization. On the other hand “employees have to be made to feel that they are responsible for customer satisfaction. They are not going to feel this if they are excluded from the development of visions, strategies, and plans. It’s important they participate in these activities.” (Stark, 1998)

3.8 SWOT Analysis

The purpose of SWOT analysis is to conduct a general and quick test of an organisation’s current position, so that it can identify preferred and likely directions in future. SWOT analysis includes Strengths, Weaknesses, Opportunities and Threats.

3.9 Product Life Cycle

This shows how the sales and profits from a product change over a period of its life. There are five major stages of the product life cycle as described in Net-MBA (2007), these are Development, Introduction, Growth, Maturity and Decline.

This cycle helps the business to develop a suitable strategy for the future.

3.10 E-Commerce / Strategic Capacity Planning

Electronic commerce is a way of buying and selling goods and services through internet. Which had been widely used and continuously growing, people can buy and sell their products without limitation of shopping hours and all around the world. This enhances flexibility for customers to shop remotely at home or anywhere which can be access internet services.

E-commerce included:

l E-Tailing provides an online catalogue for customers to look at and shopping through the e-stores.

l Electronic data exchange (EDI) is a way for business between business (B2B) to exchange.

l Email and Fax is a way for organizations as a media to communicate with their customers like newsletter.

l B2B buying and selling.

l The security of business transaction.

4.0 ORGANISATIONAL ANALYSIS

4.1 Operational Strategies

“BT set itself a goal to become the world’s most successful communications group. In order to achieve this goal through the following means to build shareholder value; in the world to seize the many opportunities in the market; to strengthen the existing business of construction, to concentrate on high-growth areas; as much as possible to provide a complete business; on the performance of BT’s Strategic positioning.” (Johnston, 2005):

l Structure and finances

l BT’ s global services strategy: key drivers

l Managed ICT services – the new competition

l The shift to consulting and services

The purpose of all the above points are to improve the rapid growth in BT’s market position, management focus, inter-departmental co-operation and flexibility to meet the future needs to find a balance point. To able to reach this balance point, we need operational strategies as main parts of the organisational construction.

4.2 SWOT Analysis

4.2 .1 Strengths

l Leading telecommunication company

l Global strategies tendencies

l Provides global telecommunication services in more than 170 countries

l Operates more than 28 million UK telephone lines

l Nationwide largest telecom coverage

l Participates in the biggest world’s stock exchange: London and New-York.

l Provides public phone box nationwide

l Leads broadband internet providers and fixed telephone lines

4.2. 2 Weaknesses

l First major company in the UK to downsize on employees.

l BT employees are filled with anxiety, insecurity and long hours of work because of the process of downsizing.

l Employees loyalty to BT has dropped considerably

l Employees overwhelmed by the amount of work to be done.

l Lack of business strategy towards the promotion of “cheap voice calls”

l General complaints about the service provided by BT.

4.2 .3 Opportunities

l Transition to the new century network (21CN) in 2010

l Emphasis on telecoms, broadband and IT solutions

l Creation of BT vision to provide high quality broadband television

l Expansion of internet smart phones services

l Contracting more overseas partners for global expansion

l Serving small businesses thanks to its “BT trade space” online service platform

4.2 .4 Threats

Increasing competitive pressure : Carphone Warehouse, Google, O2, Orange and Vodaphone

Global financial crisis

Workforce and management shortage in core business divisions, including retail, wholesale, open reach and BT global services

Increase of redemptions

Risk for BT bond market

Operating market liquidity

4. 3 Methodologies of BT

According to the BT’s Website (2008), the time of illusion was between 1984 and 1990s as soon as these two giants entered in the mid 1990s they started having organizational problems which gave a chance to BT to restructure, slow but the opportunity was unitized and BT sold manufacturing businesses after that employed more people in 1990s then BT did in 1984. During this phase of restructuring the serious problem was never removed which was low level of competition emerged in 1991 specifically in the residential markets which led the way to the end of 1990s and in 2001 according to ONS (organization of national statistics) revealed that 24.6 million exchanged line numbers, the annual decrease was 100,000.

Oftel (2001) reported that the residential fixed telephone volumes have increased from 86,598 million minutes during 1996/97 to 166.320 minutes in 2001. So in a nut shell the residents local calling volume have decreased dramatically and increase in the international calling volume of residents have increased phenomenally.

“BT now controls mobile operators in Germany, Ireland and the Netherlands but with smaller stakes in operator in Japan and eight other countries though considering all the strengths BT hold it operation narrow as compared to other telecom giants around the globe.” (FIA, 2008, pp.228)

Decision to split BT in to eight divisions and floating off minority shares in public was proposed by Sir Peter Bonfeild last year; BT wireless was expected to raise £10 million to go toward the debt. After the great depression in 1930s this economic crisis around the globe has forced businesses to take drastic measures to survive through the economic slump. However BT is trying to regain its market share through offering 20% discounts on landline minutes and some limited discounts on mobile numbers.

“After three years of rapid expansion followed by an embarrassing u-turn on itsInternational strategy, BT has returned to its home territory. Under the plan, BT aims to improve revenues from its residential and business customers in the UK and stop. Losses in its remaining international network business, Ignite”. (The Guardian, 2002).

From a newspaper article on The London Paper in November 2008, it stated that BT faces a rise in financial performance after the u-turn but as the world economy was heading towards the great depression and immense competition forced the calling rates to fall at the lowest ever level, eventually BT started ending up with losses up to 11% a massive GBP 590 million in losses which pushed the decision makers to axe over 10000 jobs as the financial crisis deepens and the salaries of the existing employees have fallen by 4%.

(Source: Kim, 2007)

Furthmore, Kim (2007) also reported that BT has started investing heavily in the development sector in its operation within the UK as even UK regulators have agreed with the thesis that clear evidence of demand, sufficient to provide a payback, is lacking which is solely because of the crisis around the globe though BT is trying on the highest degree to regain at least some portion of its business through investment in new ventures but on the other side of the coin BT has to face the reality which is the after math of credit crisis.

4.4Competitive Advantages of BT

The table in Appendix 2 shows a comparison of the organizational background, structure and vision between BT and Virgin. Further, these help to analyze the competitive advantages of BT and how BT can survive in these competitive markets.

Through those comparison made in Appendix 2, it is conclude as that BT promoting a ‘flexible working’ environment for their employees to gain competitive advantages. This approach enable both employees and BT benefit in many ways, innovating new technologies facilitate employees by accessing the information they need at anytime and anywhere which means employees can carry out their work at home, this enables employees to have better control on their lives and work, in such way employees can work more efficiently and effectively and therefore benefit the organization. This is also a good way for motivating their employees and building trust in working relationships.

4.5 Case Study on BT – Surpassing Operational Risk Expectations

Nowadays, global business is facing an increasing numbers of restrictions to their operations. Here is a case study on international bank surpasses regulator’s operational risk expectations.

Business Opportunity: The Bank of New York is one of the companies with this problem and they are responsible for managing more than one trillion dollars of the investors in the UK.

BT used this business opportunity to offer this bank with the high standard of service while other company fails to meet all the requirements. BT offers the bank with ability to mobilise resources from data mail center to other center and providing complete communications infrastructure at the same time.

BT’s Solution: As the bank requires a high speed and secure network. Therefore, BT offers them a solution with their high technologies to provide them with a suitable network for use over long distances and to make it ideal for business planning. So then, for business purposes, the bank will be able to update to all location all the times.

4.6 Case Study on BT – Telecom in India

BT has also expanded their business to India.

India is a developing country with high population. However, there is a serious lack of communication in most rural areas. BT approached to a local organisation in India to promote human rights and development. They are helping people to find out their solutions on the internet and communicate with others.

People in India are satisfied with these services to solve out their problems.

Through this business’s attempt, BT is able to increase their profits and develop a good brand image in India with their high technology and high quality services.

5.0APPLICATION OF MANAGEMENT THEORY TO PRACTICES

In this chapter, it will look at the methodologies which will be appropriate for British Telecommunication Company. According to the previous chapter of academic literature research, a series of findings in management theories had been analyzed and take consideration in which management theory is suitable for BT.

Most of the management theories we discussed in the previous chapter have their own advantages and beneficial factors towards different type of organizations, but not every management theory will fit into every single organizational structure. Hence, it had been selected that ‘Total Quality Management’ , ‘Globalization’ and ‘E-commerce’ should apply in BT. The reason that TQM and Globalization had been chosen is because of the BT visions is to “help all our customers make their live and business better with products and services that are tailored to their needs and easy to use.” (BT plc, 2008) which is totally connecting with the aim of TQM theory, as TQM had been widely used for many organizations and the research shown the successful rate of organization after applied TQM for their company, therefore TQM had been considered as one of the important management theory which could be used in the future improvement for the organization.

On the other hand, Globalization and E-commerce is the integration of world’s economy. BT used the opportunity to work with other foreign companies. They are seeking to meet customer needs in increasingly effective ways has raised customer expectations in many markets. BT is now able to meet ever greater customer demands about their quality, service and price. By providing E-commerce services, BT can attract more potential customers through different countries and regions, customers could be get track easily by BT using the customers database, which storing the customer’s information once they are register as a member of BT. This could be a competitive advantages for BT to analyze their customers buying behavior and preferences of specific products and services, and make better business strategies for future promotion and advertisements.

6. 0 CONCLUSION

BT is one of the world’s largest telecommunication and development companies, they use the latest technology to develop an ideal IT system and communications network in the globe. With the large support of research team in the organisation, BT is able to understand the customers’ needs, and then they react very quickly to improve their quality of products and services. Further, BT has expanded their business to the international markets and they are willing to change, in order to get competitive advantages and to maximise their profits.

7 .0 RECOMMENDATIONS

  1. Considering both the political and economic aspects both provide the key analysis of supporting the technologies and utilization.
  2. BT should more focus with respect to the social aspect as it refers strongly with the requirement of qualitative and quantitative analysis of new products which would rather locate for the customer preference.
  3. Comparatively with the above mentioned aspects Technology plays a vital role in the sector of industry where BT need to be stronger and updated at every mode.
  4. BT is the major company to down size its employees but can be over come by the transition of new century network within a couple of years which is expected by the end of 2010.
  5. The service provided by the BT Company is low effective and can be improved by new interface IT solutions and quality networking.
  6. By expansion and contracting with overseas partners will be challenging with respect to global challenging and to defend from the financial crisis.
  7. To exist in a competitive environment with the other competitors BT need to emerge as a global leader and provide more services in full extent.
  8. The efficiency of handling the general complaints must be extended to high quality aspects.
  9. BT should develop and initiate new development methods for promotion of cheapest voice based calls and increase its business strategies.
  10. BT should plan and execute a systematic working condition for its employees and focus on working standards to regain employees’ active participation
  11. Maintaining good relation with respect to political scientists and analysts will upgrade the changing forms of the legislation in different countries by which BT can be advantageous with respect to its development globally.
  12. Business solutions can be comparatively effective for the development and review of BT with the advanced updates of pest analysis.
  13. Innovative expansion and growth of the industry depends on the qualitative supply.
  14. Demand increases by providing the cost effective products to the supplier which in turn gives high market value within the organization and as well as external environment.

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