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Deloitte Consulting LLP Telecom: Recommendations for Growth and Stability Date Sisi Sun Ward Wood Sarah Xie Team 22: The Three Musketeers 1.

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Presentation on theme: "Deloitte Consulting LLP Telecom: Recommendations for Growth and Stability Date Sisi Sun Ward Wood Sarah Xie Team 22: The Three Musketeers 1."— Presentation transcript:

1 Deloitte Consulting LLP Telecom: Recommendations for Growth and Stability Date Sisi Sun Ward Wood Sarah Xie Team 22: The Three Musketeers 1

2 - 2 - Tele-C.O.M. Our C.O.M recommendations could help Telecom ensure stability while achieving growth by 20%. C C ooperate O O verseas M M M odernize and M otivate Promote teamwork and growth through CAP program, stock options and organizational restructuring. Improve service level by investing in vendor management. Terminate operations in Argentina, enter Brazil and offer new services and products. How can Telecom ensure stability while achieving growth? 2

3 - 3 - Employ Collaborative Assistance Program (CAP) to create a communal and open environment CAP Open office space Seasonal 3- Day Retreat Workshop Training Lack of teamwork consistently a top complaint in exit interviews. O O verseas MM M odernize and M otivate C C ooperate 3

4 - 4 - Each Component Serves a Unique Purpose CAP Components Open office space 3-Day All-Company Seasonal Retreat Monthly Workshop Training Purpose Environment for team problem- solving, promotes communication Employees meet peers from other company areas, clearer vision of company mission Employee feedback opportunity, encourages teamwork O O verseas MM M odernize and M otivate C C ooperate 4

5 - 5 - Stock Options to incentivize and retain employees Stock Options Performance = reward Exercise date to redeem Used by most mobile companies Incentive Loyalty High Employee Retention Mutually benefit O O verseas MM M odernize and M otivate C C ooperate 5

6 - 6 - Restructure Organization to increase efficiency and teamwork O O verseas MM M odernize and M otivate C C ooperate CEO Pres. COO CFO V.P. Tech. V.P. Mkt. & Comm. V.P. H.R. V.P. Strat. 6

7 - 7 - O O verseas: Strategy in three stages Terminate Discontinue Operations in Argentina Expand Launch into Brazil Lead Offer New Products & Services O O verseas MM M odernize and M otivate C C ooperate 7

8 - 8 - Exit Argentina due to high risk O O verseas MM M odernize and M otivate C C ooperate Terminate  High Economic and Operational Risk in Argentina  Risk of Governmental Nationalization of Mobile Infrastructure 8 Source: HIS Global Insight

9 - 9 - Brazil & Mexico have high potential for growth O O verseas MM M odernize and M otivate C C ooperate Expand  Brazil & Mexico’s combined revenue will be 500% of Argentina’s  Brazil to generate $16 Billion in revenue by 2017 Revenue (Millions) Mobile Revenue Growth 9 Source: Frost & Sullivan

10 Enter Brazilian mobile market while penetrable Expand  No Monopoly of the mobile market  Population: Million  Current Mobile broadband penetration: 10.7% O O verseas MM M odernize and M otivate C C ooperate 10 Source: Frost & Sullivan

11 G products & services will gain huge traction by 2017 Year 3G Technology (Million) 4G Technology (Million) CAGR39.5%159.2% O O verseas MM M odernize and M otivate C C ooperate Lead  Offer 4G services while new  Give rebates to users switching mobile companies  Allow trading 3G device for 4G devices + fee Brazil Lines Forecast by Technology 11 Source: Frost & Sullivan

12 Three options Insource Switching to Another Outsource Company Invest in Vendor Management with ITCo MM M odernize and M otivate   Investing in Vendor Management is the most viable option 12 O O verseas MM M odernize and M otivate C C ooperate

13 Improving Vendor management with current outsource company is the most viable strategy Aspects to consider Insource Switching to another Outsource company Need to build internal capabilities Switching cost Relationship with current outsource company Negative Neutral Positive Options O O verseas MM M odernize and M otivate C C ooperate Invest in vendor management Setup cost 13

14 O O verseas MM M odernize and M otivate C C ooperate Two different solutions needed for the two different performance levels 14

15 Modernize the helpdesk service can reduce response time 15 Text Modernize FAQs Result: Hugely Reduced Response Time O O verseas MM M odernize and M otivate C C ooperate 15

16 16 Text O O verseas MM M odernize and M otivate C C ooperate Motivate by incentive program can improved service level Incentive Program  Additional 5% commission fee for reaching specific target  Specific performance metrics provided as guideline Result: Significantly improved service level on the last three IT Service $1 million 5% $ 50,000 If the total Application maintenance cost in America is $1 million 16

17 Copyright © 2010 Deloitte Development LLC. All rights reserved. 17 Months Milestone C ooperate Restructure Stock Options CAP Overseas Terminate Expand Lead Modernize Live Chat FAQs Online Motivate Incentivize Implementation Set-up Time for Recommendations 17

18 Tele-C.O.M. Our C.O.M recommendations could help Telecom ensure stability while achieving growth by 20%. C C ooperate O O verseas M M M odernize and M otivate Promote teamwork and growth through CAP program, stock options and organizational restructuring. Improve service level by investing in vendor management. Terminate operations in Argentina, enter Brazil and offer new services and products. How can Telecom ensure stability while achieving growth? 18

19 Deloitte Consulting LLP Questions? Date Sisi Sun Ward Wood Sarah Xie Team: Three Musketeers 19

20 Appendix 20

21 It seems that the Application Maintenance cost of Mexico is a little too high… 21

22 Estimated commission fee bonus for reaching target service level Total amount of IT Fee: $13,865,000 commission fee bonus for reaching target service level:  $13,865,000 * 5% = $693,250 Total cost of IT fee it ITCo reached its target service level:  $13,865,000 +$693,250 = $14,558,250 After calculation, we find that the service fee over time will not decrease too much, even though the estimated volume of calls for the help desk will decrease by as many as 50%. That is because the unit cost per call is a small number in all the countries. 22

23 Copyright © 2010 Deloitte Development LLC. All rights reserved. 23 Benefits Cost Source: insert source information here However, the benefit of having Mexico market outweighs the cost! High CAGR High market share 80% Slight risk Relatively high application maintenance cost 23

24 Mexico & Brazil’s % market share to rise while Argentina & the rest of Latin America will fall O O verseas MM M odernize and M otivate C C ooperate 24

25 Cost of Operation in Brazil Cost (Millions) Source: Team Analysis

26 Copyright © 2010 Deloitte Development LLC. All rights reserved. 26 Risk and mitigation strategies for Human Capital Risk Factor Impact and Probability Mitigation Strategy New collaborative office set-up could be distracting during work hours Designate rooms for cooperative projects Organizational restructuring could cause confusion in transition period Provide training and notice of restructuring 3 months in advance Create a “cheat sheet” clarifying all roles and the new structure Probability Impact X X X Source: Team Analysis 26

27 Copyright © 2010 Deloitte Development LLC. All rights reserved. 27 Risk and mitigation strategies for Strategy Risk Factor Impact and Probability Mitigation Strategy Difficult entry into Brazilian Mobile Market Research competitors & use competitive advantage of new products Expensive to enterUse capital gained from implemented recommendations months in advance Unawareness of 4G and LTE Advertising, marketing (World Cup, Olympics) Probability Impact X X X X Source: Team Analysis 27

28 Copyright © 2010 Deloitte Development LLC. All rights reserved. 28 Risk mitigation strategies for Technology Risk Factor Impact and Probability Mitigation Strategy Need capital for new service development Use saved operating costs from leaving Argentina Incentives do not result in improvement Turn to insourcing, or find another outsourcing company Probability Impact X X X Source: Team Analysis 28

29 Copyright © 2010 Deloitte Development LLC. All rights reserved. 29 Leadership Responses from 71 Manager-Level and Above Exit Interviews over the past year: Staff Level Responses from 1,217 Staff Exit Interviews over the past year: O O verseas MM M odernize and M otivate C C ooperate 29

30 Copyright © 2010 Deloitte Development LLC. All rights reserved. 30 Stock Options for Comparison 30

31 Copyright © 2010 Deloitte Development LLC. All rights reserved. 31 Short and Long-Term Costs and Revenues for CAP Cost1yr3 yr Retreat Related Costs $10,000$30,000 Cost of Expanding Office $50,000$0 Workshop Training Cost $10,000$30,000 Total$70,000$60,000 Revenue1yr3 yr More Teamwork $20,000$60,000 More Collaborative $15,000$45,000 Better trained to work efficiently $20,000$60,000 Total$55,000$165,000 Revenue-Cost= ($165,000+$55,000)- ($70,000+$60,000)= $90,000 31

32 Copyright © 2010 Deloitte Development LLC. All rights reserved. 32 Short and Long-Term Costs and Revenues for Stock Options Cost1yr3 yr Cost for buyback $10,000$30,000 Total$70,000$60,000 Revenue1yr3 yr Greater employee retention rate $20,000$60,000 Increased efficiency $30,000$90,000 Total$50,000$150,000 Revenue-Cost= ($150,000+$50,000)- ($70,000+$60,000)= $70,000 32

33 Copyright © 2010 Deloitte Development LLC. All rights reserved. 33 Short and Long-Term Costs and Revenues for Organizational Restructuring Cost1yr3 yr Training Costs $20,000$0 Salary increases for CFO and COO $30,000$90,000 Inform Employees $10,000$0 Total$60,000$90,000 Revenue1yr3 yr Teamwork$30,000$90,000 More Collaborative $20,000$60,000 More efficient structure $20,000$60,000 Total$70,000$210,000 Revenue-Cost= ($210,000+$70,000)- ($90,000+$60,000)= $130,000 33


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