Analysis and Problems of Global Communications

The pending expansion of Global Communications into the international arena has significant implications, both positive and negative, for the corporation. Although the company is going through a difficult time at the present, with stock depreciations, a lack of innovation, and pending layoffs, the potential for growth and for increased profitability with the new direction chosen by the company's executives is very real. If Global Communications can address the challenges immediately facing it, take advantage of the opportunities which are available, and at the same time balance the needs of competing groups of stakeholders, it can realize several of its long-term goals as outlined later in this paper. Diminishing returns across the entire telecommunications industry have negatively affected the stock and profitability of Global Communications. Excessive amounts of competition from companies worldwide have diluted the market as well as offered a wide range of features that Global Communications does not currently provide. Small providers offer specialized services, and larger multinationals offer lower prices and more competitive service choices. Global Communications has chosen to address this problem by simultaneously attempting to cut costs while expanding internationally; their primary method of achieving these immediate goals is through closing some domestic call centers and opening new centers overseas. The employees' union has obvious problems with this strategy of layoffs and outsourcing, and has questioned Global Communications' loyalty to its workers. The company faces significant problems, both fiscally and intangible issues such as employee loyalty. The first of these issues is the declining price of Global Communications stock, presumably due to the increased amount of competition in the field. Such a decline in overall profitability is the most pressing problem facing the company; however, it is also the broadest in that several more specific problems contribute to this overall issue. One of the contributing factors is the need for new services and innovations in research and development. Such innovations require capital and financial resources, which relates to the problem of declining confidence among stockholders, who are wondering if they industry can recover from the competitive situation in which it currently finds itself. The problem of stockholder confidence therefore contributes to the lack of funds available for innovations and research, meaning that the company must find a way to increase profits without depending on stockholder confidence. The initial attempt to address these financial issues, outsourcing many jobs to Ireland and India, has also created more problems for Global. The employee union feels betrayed and is threatening legal action regarding the layoffs. Additionally, the public relations issue regarding this outsourcing is an important one for Global to address in order to prevent a public backlash in response to the outsourcing and union-relations issues. Despite the many problems facing Global, several opportunities exist for the company to grow and become as profitable as it was during the previous era. There is an immediate opportunity available to lower the costs of labor facing the company by utilizing the outsourcing plan and the labor available overseas. Such an action will free up company resources to be spent on research and development of new services and products, which will rebuild the base of Global Communications customers through the many services offered. Additionally, such an expansion in services will increase the market share for Global among small business owners, one of the company's overall goals, and offer the opportunity to reinforce a public perception of Global as one of the leaders in telecommunications technology. Besides these profitability issues, there is an opportunity to establish new norms regarding the union and employee relations within Global. Perhaps an established plan of communication or route of information dissemination can be created, and career counseling and training could be offered for the employees who were laid off, helping re-establish the public and in-company perception of Global. The most obvious opportunity for Global is also the broadest; the chance for the company to grow and return to previous years' profitability is one that exists in the current atmosphere of change. Global leaders must take advantage of the many opportunities to change the company, its relationships, and its products and technology as soon as possible. Stakeholder Perspectives/Ethical Dilemmas There are several groups of stakeholders in this discussion; from the individual stockholders to the union members to the highest executives, the different groups all have different priorities in the Global restructuring. Stockholders have at heart the long-term profitability and growth of the company, similar to the priority of global executives to see the company grow and profit overall. Other groups, notably the employees and union representatives, have as their first priority the job security and salary of employees as their first priority; the relationship with management and the pending layoffs are more important to these groups than profitability or growth. Finally, the executives in the U. S. ave more concern over these job cuts than do the global executives, since they are the ones who will be most adversely affected by the layoffs and outsourcing. The struggle between these groups to have their own needs prioritized represents an ethical dilemma for Global; the negative affects of the layoffs must be weighed against the overall survival of the company; the detriment to individual employees and public perception must be weighed against continuing Global's position as an innovator and industry leader. Global Communications and the employees' union can both benefit from the increased profitability which will happen as a result of the outsourcing and shift in services offered; in the long-term, both groups can work to create benefit and profit for individual stockholders as well as company executives and management. This long-term benefit will additionally give Global employees greater job security. The progress of Global toward the situations possible by the many opportunities available to it can be measured through several objective methods. One that is mentioned in the 3/2/04 memo is a concrete goal of reducing costs by 40%. Such a goal will naturally benefit the company based on the reduction of cost and increase of profits. Additionally, a concrete goal to resolve the issues with the employees' union without legal or governmental action would be an excellent way to re-establish the relationship between the company and the union. Another measurable goal would be to return the stock price to a certain level, for example, that of the previously profitably $28/share. Global Communications faces some immediate and important problems, such as decreased profitability, decreased stockholder confidence, pending layoffs and the public-relations issues which accompany them, and increased competition within the telecommunications industry which requires new innovations and development. Despite these immediate problems, there are many opportunities for Global to benefit from its current situation; it can take advantage of the chance to reduce costs by outsourcing and then increase research and development with those funds; it can re-negotiate the relationship with its employees' union to a more beneficial one for both parties; and it can remodel itself as a modern, cutting-edge competitor in the field of telecommunications. Such opportunities can benefit all stakeholders in Global, from the individual stockholders to employees to global executives, by strengthening the financial and community/social situations of the company. Although the implementation of these changes may be uncomfortable at times and even immediately painful for several groups (the employees' union, for example), the overall benefit for everyone involved must be kept in mind. Long-term goals can be used to track the company's progress toward achieving its end goal of returning to an innovating, profitable organization