gbc dizz scenario a - revised)

8/2/2019 GBC Dizz Scenario a - Revised)

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You are the consultant of Dizz PLC

Prepare a report that prioritises, analyses and evaluates the issues facing the board ofDizz. You should make recommendations where appropriate.

Read all the information provided before you begin.

Note: Todays date is 10May 2009. You should write your report as at 10 May 2009.


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Errors in the upgrade of contracts details within CAS

Every six months Dizz has to update the contract terms on its CAS system. Contract termsare routinely altered to reflect current market conditions. Due to the vast numbers ofcustomers it has, the update process is automated with a program being written to assignthe new contract terms to the appropriate customers.

After the latest update in Europe, Dizzs European call centre has been inundated withcomplaints from thousands of customers claiming that they are being charged too much forcalls and service. The price customers pay for service is viewed as one of the maindeterminants of service provider choice. The normal call centre service (to deal withdamaged phones for example) is being badly affected causing a worrying drop in thequality of service.

The program was written by an outside contractor used for the first time as they werethought to be cheaper and more skilled than Dizzs internal IT staff.

Performance related pay (PRP)

After a recent employee satisfaction survey and as a result of the annual employeeappraisals the HR director has proposed the introduction of a performance related payscheme for all employees worldwide.

The HR director has argued that although the scheme could increase wage levels by anaverage of 5% there would be benefits of improved productivity and customer servicelevels. He admits that the benefits are difficult to quantify at this stage but has sited thatother schemes he has been involved in produced a 3.5% increase in productivity per manhour.

Regulator threat in Yee

When the business in Yee was bought, the management had to accept the licenceconditions that had been originally agreed. These stated demanding targets for reliability ofthe network and geographical coverage in Yee 30 October 2009.

If these targets have not been met the regulator is proposing to fine Dizz 5% of the ARPUin Yee based on the customer numbers and ARPU figures for year ended July 2007. If thesituation has not rectified itself within six months of the first deadline date the fine would berepeated and if the problem still existed six months after that the licence would be lost.

The Dizz management understand that they do not at present meet the conditions laid outin the licence agreement. They have recognised that the transmitters used in Yee aresubstandard and to upgrade them would cost 80m. The upgrade should remedy theproblem completely. The installation program would take approximately eight months tocomplete (assuming normal working practices) and had not been started as at the 10 May2009.

The regulator is known to be tough but fair minded, willing to work with mobile companiesand unaligned to any political party in Yee. He is interested in service levels believing themto be vital to the growth of the Yee economy.


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Resignation of CEO in Africa

After a dispute about Dizzs strategic direction the CEO of the African division resigned andis set to join a major competitor in Africa.

The CEO of Europe has been asked to oversee the African operation. He has no Africanmarket experience and has agreed to travel to Africa once each month for two days to keepan eye on things. The CEO of Europe is known to be dismissive of the African marketsaying `I know its growing but the ARPU is so low we barely make the margin all the effortwarrants.

The outgoing CEO of Africa has agreed to a detailed handover of responsibilities in twoweeks time when the first visit is due. No other steps have yet been taken.

Organisational structure

Quick to seize the opportunity of the resignation of the CEO in Africa the group financedirector (GFC) has proposed a shake up of the current matrix based organisationalstructure. He claims that the posts of CEO of the regions (Europe, Africa and Asia) aresimply not needed. He goes on to claim that the strength of the functional people in theorganisation is sufficient to manage the business effectively from the centre.

The CEOs of Asia and Europe are unaware of this proposal and will be surprised by itwhen it is discussed at the next board meeting.

Acquisition of a handset manufacturer

An opportunity has arisen to purchase Casung a mobile phone handset manufacturer.Casung is privately owned by an aging family keen to exit from the business. Casung has anumber of mainly older handsets and competes within the second tier of handsetmanufacturers around the world. It is based in Eastern Europe where competition is fierce.Dizz has little experience of the region in which Casung operates. The asking price for thebusiness is an affordable 10m.

Network security

Dizz has been the subject of sustained attacks by hackers over recent times. Globally theincidence of identity theft and the theft of call time has been ever increasing. To date Dizzhas not suffered greatly and this has prompted the global operations director (GOD) to

state that investment in the preventative technology does not have to be increased beyondcurrent levels.


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Marketing drive in Asia

The regional manager has recently commissioned a new marketing campaign designed totarget children via their parents. The safety aspect of carrying a mobile phone will bestressed on a TV advertising campaign, designed to worry parents in to investing inmobiles for their children.

The phone will be financed within the parents mobile phone contract with Dizz. A specialrate was to be offered to keep the cost affordable.

The regional manager is suggesting that this campaign should be rolled out to otherregions.

Shop in shop proposal

A major department store has offered space in 100 stores in Europe for Dizz to open retailoutlets. The department stores are mostly based in the high streets of European cities butare also in some out of town locations as well.

The lease for the sites is on offer at 40,000 per shop per year. A ten year lease is beingproposed with no break clause part way through. Running costs are expected to be24,500 per shop per year. Market research indicates that Dizz could expect 7,500 newcustomers per year who would sign a short 12 month contract they would then leave toseek another good deal. These new customers would produce an ARPU of 300 and amargin of 35%.

The capital investment required would be 125,000 per shop for fitting out. The whole dealwould be free of tax under an EU directive to encourage post recession investment.Finance would cost 6%.

Other retailers are interested in the site and the department store has asked for an initialexpression of interest with a view to signing contracts by early 2010.

Appointment of a consultant

It has been agreed to appoint a consultant to help with the above issues.

Remember it is now 10 May 2009.

AuthorGeoff CordwellCordwell Consulting Limitedwww.cordwellpublishing.co.uk

gbc dizz scenario a - revised)

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