Telstra Case Problem Essay

Telstra is one of the Australia’s leading telecommunications provider. For many years Telstra owned monopoly in telecommunication market. A change in government policy to reduce the monopoly power of Telstra has resulted in many problems. Telstra is following Classical approach of management as it seeks to achieve effectiveness by focusing on task efficiencies i. e. focusing on their next G wireless broadband and not on external stakeholders (Schermerhorn, Davidson, Poole, Simon, Woods, Chau, 2011, pg. 183). Telstra needs to use more humanistic or contingency approach of planning.

This report will argue the need for Telstra to use more contingency approach of planning to regain its market dominance. •Problem Identification Telstra as a telecommunication provider has many external environment which it needs to take into consideration while making decision. In particular, government change in decision has led into many problems that Telstra is currently facing. Telstra was following non-competitive behavior as Telstra owned the network as a wholesaler and also sold the network to customers as retailer.

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Telstra also needs to change its classical approach of planning into contingency or humanistic approach of planning. So, that it can cope with uncertainty as contingency planning assume various set of assumptions about the future and help to minimize the risk of negative events (Bloom, M. J. , & Menefee, M. K. , 1994). As Mintzberg states, “Classical planning often tends to understate both creative and strategic level of thinking making it more difficult and creating inflexible resistance to major strategic changes.

It discourages truly novel ideas in favor of extrapolation of the status quo. There by, focusing attention on the short term instead of the long term. ” Another problem was Telstra didn’t cooperate with government by refusing to bid on the Australian government plan for a national broadband network as it was more focused on its own Next G wireless broadband. The problem with Telstra is lack of planning because Telstra seems to be ignoring shareholders expectation. Telstra was trying to make short term profit at the expense of long term survival. Critical Analysis Max Weber (1952), Henri Fayol (1949), and Lyndall Urwick (1943) developed the basics of classical theory.

Their theories are based on the researcher’s perspective of organization rather than on rigorous empirical testing. Weber stated classical theory to be a division of labor, centralization of authority and organizational rules and regulations (1952). A scenario has been defined as “an internally consistent view of what the future might turn out to be-not a forecast, but one possible future outcome” (Porter, 1985, p. 3). Scenario-based planning is about thinking out of the box and going beyond the rules of a company. There are different approaches to Scenario based planning. One of them is future mapping which assumes that future is dependent upon the action of various participants and to achieve competitive advantage most companies often change their structure. End states and events are the two sets of tools for future mapping which helps in the process of scenario planning (Mason, D. H. , 1994).

Executives pointed that at times of an “economy in turmoil, investors in retreat, and managers under attack” (Rigby, 2003, p. 4) they needed ways to deal with overwhelming circumstances. Scenario planning is the long term view of contingency planning. Although, scenario planning has helped organizations to anticipate and cope with change, it still has not been able to prove its effectiveness in informing organizations leaders about emerging political, environmental, economic or societal changes (Mintzberg, 1994).

Another problem with scenario planning is not having any theory so the process of scenario planning is never fully understood nor fully validated (Chermack, T. J. , 2004). Although, there are some theories such as constructivist learning (van der Heijden, 1997), mental models (Senge, 1990), decision making (Wright & Goodwin, 1999), system theory (Georgantzas & Acar, 1995), and strategic management (Porter, 1985), these areas need to be explored in order to combine the various parts of scenario planning into a theory.

Therefore we need to adopt humanistic or contingency approach which is more relevant to Telstra. Contingency planning involves preparation of contingency plan, a crisis-management plan and a crisis-recovery procedure. A crisis management plan is the alternative to contingency plan if it failed to solve an issue within a certain time (Fairley, R. , 1994). The steps involved in preparation of a contingency plan includes specifying the nature of a problem, considering alternative approaches, specifying limitations, analyzing alternatives, selecting an approach.

Level of complexity and turbulence affects the method adopted for planning process. High level of complexity makes high level of uncertainty among planning groups. As a result existing knowledge bases, analytical routines and formal planning approaches are less likely to be appropriate for planning members (Sambamurthy, V. , W. Robert & Terry Anthony, 1994, p. 3). Contingency planning is about thinking alternative course of action when circumstances changes over time.

In the case of Telstra, it was previously government owned but now its privatized. So, the planning made when it was run by government will no longer be relevant. Therefore, it needs to change its action into other alternatives accordingly. The term “humanistic” is an old and well off concept. It’s about realizing human common needs and put them on the management approach. During the 19th century German scholar F. J. Niethammer introduced the term “humanism” as humanismus (Mele, D. , 2003). Many theorist developed the theory of humanism.

The first approach to humanistic management was written by Mary Parket Follett during 1925 as “We can never wholly separate the human from the mechanical side…But you all see every day the study of human relations in business and the study of operating are bound up together” (Graham, 1994). Mayo’s study found that people get job satisfaction through informal work group and this increase work productivity. It is found that workers like more communication system in the workplace. The 2nd approach to humanistic management is related to organizational culture.

It was in 1980’s the concept of organizational culture gain its importance as the work of Peters and Waterman (1982), showed that work excellence is closely related with strong organizational culture. Also, Deal and Kennedy (1982) studied 200 corporate cultures and their effect on business productivity. Organizational culture is basically how people work in an organization. The third approach to humanistic management is related to building up a community of people as human being is a social animal and they are capable of gaining virtues that perfect them which helps them to grow.

This approach considers the ethical side for the need of self actualization (Mele, D. , 2003). It has been found that classical theory considers only the economic need of human beings, on the other hand the humanistic management takes into account the need of a human being to grow as a person through human virtues. Considering the human self actualization needs in a workplace leads to greater motivation thereby, resulting in increase efficiency in workforce. •Recommendation

As the government has changed its policy to reduce the monopoly power of Telstra, it needs to split its organization into 2 parts. One being technical and the other is retail part. For the technical part Telstra needs to follow bureaucratic or classical approach. As technical part is often task related and there needs to be a clear division of labor depending on the different skills of worker, proper rules and regulations needs to be set out as the job needs to be done perfect (Weber, 1952). Classical approach supports this type of work environment.

On the other hand, for the retail outlets of Telstra it needs to follow humanistic approach. Telstra needs to understand and fulfill the human nature of self actualization and their need to socialize. Customers being one of the important stake holders for Telstra it needs to focus and improve its customer service rather than just focusing on profit. Humanistic approach supports this type of work environment. •Conclusion Telstra does have a management problem as it only follows classical approach of management.

Telstra needs to improve the quality of service it is providing to customers to maintain its dominance as there are other competitors entering in the market. Telstra also needs to follow competitive behavior. After reviewing the literature, it has been found that if Telstra could mix both the classical and humanistic approach to its management then Telstra could improve its performance. Scenario based planning is also a good alternative to Telstra but it lacks clarity in theory which pose a problem for its implementation.

References
Bloom, M. J., & Menefee, M. K. (1994). Scenario planning and contingency planning. Public Productivity & Management Review, 17(3), 223-223. Retrieved from http://search.proquest.com.libraryproxy.griffith.edu.au/docview/209770463?acc

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