Case 5
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Samplecaseanalysis.docxCase 2 – Bell Canada Enterprises
Introduction: Issue and Cause Summarized
This case is presented by Karyn Brooks, Senior Vice President and Controller of BCE and Bell Canada. She has been with Bell for 8 years. She describes the issue of the case being a result of an extremely competitive market. This has resulted in significant costs cuts. In order to maintain current margins, and stay competitive in the market Karyn states “we can't cost cut to greatness, we do know there are places all across the organization, and because Bell is such a large company, where we can cut costs without doing any damage to customer service or the quality of the network services.” [1]
Bell Canada works hard to differentiate themselves from competitors simply by being the largest, with the biggest pockets, allowing them to provide the best products and services in the market. Bell obtains it’s deep pockets by “charge for service either based on a flat fee with a limited amount of usage or we charge on a per unit basis if you like. People buy television, internet or telephone/mobility so it's a fee for service primarily.” [2] They currently serve 13 million landlines in Canada and had a revenue $21.51billion in 2015 and a net income of $2.7billion in the same year.
Bell Canada is in competition with Rogers (TV, Internet, Wireless, Wireline) Shaw (Tv, Internet, Wireless, Wireline) Eastlink (TV, Internet, Wireless, Wireline) Telus (TV, Wireless, Wireline)[3] among many others, suffice to say, Bell has many competitors across it’s various products. This further proves the point mentioned earlier, Bell operates in a very competitive market.
Beyond the physical competition within the industry mentioned above, Bell is also in considerable competition from new emerging non-traditional technologies such as Netflix allowing their former customers to drop certain products. “We continue to face cross-platform competition as customers substitute traditional services with new and non-traditional technologies, and the rate at which such technology substitution takes place may accelerate.” [4] Because of these emerging new technologies, along with people attempting to ‘Keep up with the Jones’ Karyn states “Competition and technology are the two big risks facing the business.” [5]
Throughout this paper we will discuss the Strengths and Weaknesses of Bell, in the form of a SWOT analysis. We will also give our (3) solutions on how, if we were in Karyn’s shoes, we would solve the issues Bell is facing. Specifically, how we would cut costs, or better differentiate ourselves from competition, in order to better position ourselves in the ultra-competitive market Bell finds themself in.
SWOT Analysis
Competition in the market will at the end bring the revenue down as the prices will reduce but could always be used as a strength by the company. Profit maximization is the most critical element in business and which is obtained by the different aspects of the company including how the management is running (Bull et al., 2016). Luckily, on the other side, the company has very competitive experts on the table to make sure that all the decisions made by the company are financially correct. To be more precise it is essential that they have a literate financial manager. Having the experts who can tell and work on the business outcomes, economic improvement and at the same time, the revenues assurance is one of the strong points to hold back the threats that face the company financially. Additionally, every business requires that they work towards the same direction at all times to make sure they achieve the goal. It is also one of their strengths in the company because they work as a team and not as a dictatorship leader.
The BCE and Bell Canada Company are facing a threat to its area of weakness which is a competition that comes from the marketplace. Competition in this could be outdone in several means such as promotion or introduction of a better brand of the item which all in one way or the other will increase the cost of the company (Hill & Westbrook, 2014). The company should, therefore, strengthen their brand by reducing the price as they maximize on the output obtained. This creates the need of the weighing all the opportunities of taking such an operation. Nonetheless, the company is facing a threat from the changes that continue to occur in the current technology. If in case, they are not up to date with the present invention, this poses a risk to other related companies taking over them.
The company has an opportunity to increase its efficiency and at the same time work on its weakness and at the time threat. A cost-cutting initiative could be the most viable solution to the problem the company is facing at the moment. This is because when the cost has been reducing the revenue and cost margins will be manageable to maximize the profits achieved (Singh et al., 2018). It is encouraging that the cutting of the expenditures could tarnish the brand image of the company. Thus, the company has an opportunity to increase its efficiency in the market which will, therefore, be in a position to handle the competition that comes from the without. Furthermore, the company has the opportunity to transform as technology will always change with time continually. For example, the company in the last two years have developed two networks which show the full range of opportunity the company has in the world.
In every organization, it is always important to watch out for the weaknesses that could destabilize its operations. The company runs a susceptible business in the pricing which is very critical to the uses of its services. Prices should concur with the quality of services the individuals receive in turn. Dissatisfaction which will never miss could cause the company to feel the impact of competition as the users will move to the other service providers whom they consider sufficient. However, such failures are experienced in all the company but what matters is how often it occurs. Therefore, the company with the SWOT analysis will be in a better position to handle the competition.
References:
Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., ... & Carter-Silk, E. (2016). Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services framework. Ecosystem Services, 17, 99-111.
Hill, T., & Westbrook, R. (2014). SWOT analysis: it's time for a product recall. Long range planning, 30(1), 46-52.
Singh, M. K., Kumar, H., Gupta, M. P., & Madaan, J. (2018). A Glimpse of Sustainable Electronics Manufacturing for India: A Study Using PEST-SWOT Analysis. In Global Value Chains, Flexibility and Sustainability (pp. 271-281). Springer, Singapore.
Decision Criteria
1. Reduces Costs
2. Improve Technology
3. Implementation Costs (Time & Capital)
Alternatives
1. Lower number of employees (Headcount Variable cost) by outsourcing or phasing them out via new technology
Headcount is the single largest variable cost for Bell, gradual layoff can help Bell to achieve a leaner structure. Replaced technology will not only cut cost in a long term, but also does not damage to customer service or the quality of the networks. Improved technology will work more efficiently.
2. Develop new technology in the TV industry to better serve the needs of younger demographics
TV industry viewership is declining among young generations. Traditional TV viewing is less than 2 hours per day for young group, and half of the age group from 18-24, traditional TV viewing time has migrated for other activities. Instead of continued development of the TV industry, Bell should develop new technology substitute for TV program like Amazon and Netflix that can provide better service for the customer whom is 18-24.
https://www.marketingcharts.com/featured-24817
3. Increase transparency and customer satisfaction
Customer satisfaction improvement is beneficial to Bell. Although Bell’s proportion of all accepted complains dropped 2.5 points to 33.2 per cent, it received the most complaints of all Canadian telecommunication services at 2,275. Increased customer satisfaction will enhance customer's’ willingness to pay which will maintain margins.
|
|
Reduce number of employees |
Develop New technologies TV Industry |
Improve brand image |
|
Reduces Costs |
3 |
1 |
2 |
|
Improves Technology |
2 |
3 |
1 |
|
Implementation Costs (Time & Capital) |
3 |
1 |
3 |
|
Total |
8 |
5 |
6 |
https://www.ctvnews.ca/bell-canada-to-slash-2-500-managerial-jobs-1.311928
Solution
Given the highly competitive market that Bell is in, and given Karyn states “cost cutting initiatives are important” [6] we believe that the most optimal solution for Bell is to reduce costs by reducing the number of employees they employ. According to the case Bell employs over 10,000 employees but in 2015 this number was just south of 50,000. [7] Within the case Karyn states that the biggest variable cost is head count. Thus, in order to cut costs our priority should be on getting rid of non-essential employees. This can be done by investing heavily into technology (most expensive/time consuming) such that you can use A.I to complete jobs which currently require humans. This can include bookkeeping, customer service etc… The second way would be to give individual employees heavier workloads such that you can replace 2 employees with 1. Thirdly you can give managers more oversight/ more responsibility to lower the amount of managers or supervisors in your organization. By cutting this large variable cost down, it enables Bell to lower their prices while keeping the same margins. Karyn agrees with me, stating, “We have a significant issue because of competitive pressures in the marketplace. We have to cut costs to maintain our margins.” [8]
Justification for Choice of Solution and Not Others
Out of our 3 alternatives: Reduce number of employees, Develop New technologies TV Industry, and Improve brand image, we decided on Reducing number of employees as the most optimal. This was because it solved the primary issue of the case, as stated by Karyn Brooks. To continue to compete in this highly competitive market, Bell must maintain margins by cutting costs. The largest of those costs is a variable cost, headcount, or, number of employees. By proactively downsizing, Bell can enhance long-term competitive advantages by continuing to be the largest player in the Canadian market with healthy margins and sustained profit. Referencing Zatzick, Christopher, Mitchell Marks and Roderick Iverson, (2009) Which way should you downsize in a crisis? Sloan Management Review, Fall Vol 51. Bell falls under the Proactive-Control oriented quadrant. Characterised by employees being seen as a cost to minimize, and having an objective of increasing efficiencies for long-term advantages. This theory also states that the downsizing done by Bell should be “targeted at specific underperforming units or business processes.” [9] Rather than summarize the entire quadrant, it it shown in appendix figure 1.
In terms of ratings, this option scored a near-perfect 8/9 compared to a 5/9 and 6/9 respectively. With regards to decision criteria, reduces cost was scored at a 3/3. This alternative was far and beyond the other two options at reducing costs. As stated previously, this solution solves the issues presented in the case, lowering costs to maintain margins. The only way in which this solution increases costs is in the form of severance pay or other compensations for layoffs.
Referencing the decision criteria, improves technology, this solution lost a point scoring a 2. It was well behind the alternative of developing new technology, as one may assume. It didn’t score a 1, not improving technology at all, because we figured that the money saved could be reinvested into R&D to develop new products and new technology.
Finally, given implementation costs (Time & Capital) we scored this solution a 3. This was due to the limited time which it takes to implement layoffs, and the low cost (relative to the costs saved). The layoffs could be completed quite quickly once Bell puts a plan together about which employees/departments to axe. Additionally the costs saved by reducing the workforce far outweigh any severance packages Bell may, or may not, be required to pay out.
All in all, this solution provided the immediate benefit of reducing costs. We determined this to be the primary objective of the case, and therefore, is the best alternative.
Implementation Timeline & Risks
|
Week |
Plan |
|
1st |
Layoff planning and strategy. (The cost of the budget, the compensation required by the law, the appeasement work of the dismissed person, help or assist the retrenched employee to find a new job.) |
|
2nd |
Establish a layoff team. (This group should include members of management, human resources, law and public relations. And in the layoff team should be composed of people with different experience, gender, age, and culture.) |
|
3rd |
Implementing layoffs. (Officially announce the plan for the reduction of personnel, complete the procedures for the termination of labor contracts with the personnel who have been laid off, and pay the economic compensation and the certificate of the reduction of personnel to the person who has been laid off in accordance with relevant regulations.) |
|
4th |
Communication. Find the right psychiatrist to ensure that the dismissed person does not have a psychological problem. At the same time, the enthusiasm of other employees should be maintained. |
1. Layoffs mean that employees will have financial losses and affect their living standards, which may cause psychological problems and some unstable factors, such as stealing company data or suicide.
2. Affect the mental state and enthusiasm of the remaining employees, which may temporarily affect the company's productivity during this transition period.
3. If the company does not plan well, large-scale layoffs may face employees' collective discrimination claims, which can cost the company expensive costs.
Brown, A. (2017, February 27). How Do You Layoff an Employee? 5 Steps to Conduct a Successful Layoff. Retrieved from https://www.linkedin.com/pulse/how-do-you-layoff-employee-5-steps-conduct-successful-alexandra-brown
Jackson, E. (2018, April 10). Canadians' complaints about wireless, internet, telephone and TV services surge 73%, watchdog says. Retrieved from https://business.financialpost.com/telecom/canadians-complaints-about-wireless-internet-telephone-and-tv-services-surge-73-watchdog-says
Management's Discussion and Analysis. (n.d.). Retrieved from http://www.bce.ca/annual-reports/2011-annual-report/managements-discussion-and-analysis/our-competitive-environment
The State of Traditional TV: Updated With Q2 2017 Data. (2017, December 13). Retrieved from https://www.marketingcharts.com/featured-24817
Zatzick, C. D., Iverson, R. D., & Mitchell L. Marks. (n.d.). Which Way Should You Downsize in a Crisis? Retrieved from https://sloanreview.mit.edu/article/which-way-should-you-downsize-in-a-crisis/
[1] Acadia University (Producer). 2015. BCE 1 Multimedia Case [Streaming Video] Retrieved from Casenet.
[2] Acadia University (Producer). 2015. BCE 1 Multimedia Case [Streaming Video] Retrieved from Casenet.
[5] Acadia University (Producer). 2015. BCE 1 Multimedia Case [Streaming Video] Retrieved from Casenet.
[6]: Acadia University (Producer). 2015. BCE 1 Multimedia Case [Streaming Video] Retrieved from Casenet.
[7]: http://www.bce.ca/investors/AR-2015/2015-bce-annual-report.pdf
[8]: Acadia University (Producer). 2015. BCE 1 Multimedia Case [Streaming Video] Retrieved from Casenet.
[9]: https://sloanreview.mit.edu/article/which-way-should-you-downsize-in-a-crisis/
