Strategic and organizational integration of previously independent divisions in the telecommunications industry
STARTING SITUATION – CHANGING MARKET DEMAND AND UNREALIZED SYNERGY POTENTIAL
Landline and cellular network – two separate entities. This had been the business model, or the management model, of our customer, an internationally active telecommunications company. For a long time, this separation reflected customer behavior, resulting in high and stable revenues. However, the situation ceased to be viable, since customer needs changed dramatically within a short space of time. Because the two areas were strictly separated at an organizational level, it was impossible to benefit from either market or cost synergies – even with standard back office procedures. Additionally, the same customers were looked after by two separate sales teams, with no shared services or support functions.
PROJECT APPROACH – REORGANIZING ALL FUNCTIONS AND IDENTIFYING POTENTIAL SYNERGIES
It was a matter of transforming the fixed structures that had evolved over time. The first stage was to analyze all the functions in the holding company, including operational, service, and support units, and reorganize them accordingly. Cost synergies were identified, and standard back office processes bundled into Shared Service Centers. The cross-selling potential was also defined, and the range of services expanded to include TV, internet, and cloud services. Change management, implemented consistently from an early stage, was a critical factor for success. Only by involving all of the stakeholders and tailoring communications to the specific target groups was it possible to overcome resistance in the long term.
FINDING – STRUCTURE FOLLOWS STRATEGY: ORGANIZATION NEEDS TO ADAPT TO CUSTOMER NEEDS
Virtually no other business sector has been subject to such a rapid pace of technological development as the telecommunications industry. Our customer’s expectations, both in terms of the technologies used and the provision of top-quality services, meant that it was necessary to adjust its business model. The same imperative also applied with regard to the value proposition for its shareholders – because in a highly competitive market, no company can afford to neglect potential synergies and cost reductions.
- Formerly separate divisions restructured into an integrated business model at both holding and operational level
- Improved result, thanks to creation of shared services, cross-selling, and a new management model