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Bt Transition From Public To Private Sector
The transformation from public to private sector organisation
BT has undergone the transformation from a state-run monopoly to a competitive private sector corporation. This has involved a great deal of restructuring in terms of organisational structure and business objectives, which to some extent has been successful.
The early 1980‚??s saw the process of privatising BT and introducing a second telecommunications operator, Mercury, with access rights to the BT network. A regulatory body, OFTEL was set up to ensure that BT did not abuse its dominant market status.
It was accepted that BT‚??s management strategy and employee attitude was not suited to a competitive market environment.
BT‚??s initial response to privatisation was to concentrate on customer service related issues with the Total Quality Management program. Previously, poor customer services had been a problem for BT and the focus on customer-orientated improvements was planned to increase BT‚??s competitive advantage.
An OFTEL requirement of BT was the maintenance of a public telephone service. Throughout the 1980‚??s BT concentrated its improving and expanding the public telephone network due to increasing competition in the payphone market. The focus on quality of service in this area changed a notorious loss making area for BT into a profitable service while improving the public image of BT. The predicted growth of mobile telecommunications through the 1990‚??s led to the inevitable decrease in public telephone usage however, making the effort put into the payphone network seem futile.
BT established itself in the field of mobile telecommunications early with a majority share in Cellnet, formed 1983. A mobile telecommunications service was launched in 1985 and by 1995 Cellnet had 2.5M customers, a 43% market share. Over the next few years BT saw a huge increase in competition in this market from mobile network operators such as the worlds largest mobile operator, Vodaphone and later Mercury‚??s One2One and Hutchinson Telecom‚??s Orange. Cellnet has consistently maintained a proportionate market share however and greatly benefited from the mobile phone explosion of the late 90‚??s. A major investment was made into the purchase of a third generation mobile operator licence last year, which created a ¬£30 Bn debt for BT but may safeguard the future of Cellnet.
In the early 1990‚??s the combination of tougher OFTEL regulations, increasing competition and recession in the UK made BT realise that development in foreign markets would be required to maintain profitability. This expansion started in 1989 with BT investing in a 22% share in McCaw Cellular and forming an alliance with Motorola in the US. Many schemes were planned for joint ventures with other international operators. Syncordia was a scheme involving several major telecommunications players, which despite much organisation did not come together. Concert was a joint venture with MCI involving extensive service network and organisational integration. The project attracted a lot of customer backing but MCI pulled out due to a corporate takeover by WorldCom in 1997. A lot of investment had gone into the Concert scheme so BT continued to seek the interest of other major operators. One of the strongest global alliances was made with AT&T in 1998. The financial support of AT&T enabled the launch of Concert in 1999 with both companies servicing their top customers.
A programme called Breakout, 1994-5, was aimed at integrating the efforts of the previous programmes and re-engineering BT‚??s business processes. An external consultant was brought in and used in conjunction with employee surveys to identify areas requiring change. Employees were taken from all over the UK to plan new strategies and test them in pilot schemes. Despite the fact that one profitable pilot scheme became the size of a fair business, the Breakout project was generally regarded as lacking substantial result. The need for a programme to bring together the effort of previous schemes shows a lack of focus on results and indicated that the required restucturing was attempted in over ambitious steps.
Between 1984 and 1995 BT spent ¬£20Bn on network improvements concentrating primarily on the digitisation of trunk transmission systems. In the early 1990‚??s foreign Cable companies began showing an interest in the UK market and the installation of local area cable networks started to grow. The ability to provide entertainment as well as telephone services created a competitive advantage unavailable to BT due to an OFTEL restriction on Multimedia service provision.
The beginning of this year, 2001 the multimedia broadcasting restriction imposed on BT expires. A new department has been created to develop suitable services but without the experience of other competitors in this market, BT must work hard to catch up.
Strengths, Weaknesses, Opportunities and Threats
Points are in chronological order
National operator status and image
Well established infrastructure
UK industry experience and contacts
Extensive R&D facilities
Established reputation for Quality of Service
Reduced organisational structure and staff numbers
Diverse range of alliances formed
Non-competitive attitude of staff and organisational structure
Inexperience at marketing
Reductive restructuring required
Radical organisational restructuring schemes
Large existing customer base
Expansion of the mobile telecommunications market
Increase in demand for new telephony and internet services
Globalise service provision
Internet windfall to benefit mobile market
January 2001 multimedia broadcast restriction expires
Possession of a third generation mobile operator licence
OFTEL pricing restrictions
Trunk network digitisation
BT multimedia service restrictions
Domination of the multimedia services market by rivals
The transition to a private corporation, BT was slow to restructure and focused many efforts in the wrong direction. Early expansion into mobile telecommunications was a long-term beneficial move. Failing to install local high bandwidth networks in preparation for the expiry of the multimedia broadcast restriction was an opportunity lost. The large mobile licence debt affects BT as a whole while Cellnet is becoming a separate entity. Overall, BT has maintained a consistently high service standard and some of the lowest rates in Europe, expanded appropriately and performed adequately as a company however.
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