Facts of the Profitel Inc. Case

Facts of the Case

Profitel Inc. is a publicly traded enterprise in the telephone business. It spent many years in the market with minimal competition and currently controls majority of the telephone copper wiring across the country. The company began to have increased pressure and competition in the cellular telephone business as new technologies are emerging in the industry. Since Profitel’s dominance in the market was being threatened, the company decided to search for a new chief executive; someone who is not currently in the organization, more like an “outsider”.

The board of directors decided on Lars Peeters, a man who had been CEO of a European company for six years, as well as briefly being a CEO for a cellular company in the United States. Peeters brought extensive knowledge, leadership skills, and an impressive strategy to increase Profitel’s profit margins. Some key parts of Peeters strategy involved: investing in a wireless broadband company; trying to reduce costs by laying employees off and last, putting pressure on the government in attempt to make them deregulate businesses.

Although it seemed like a perfect plan, it did not play out as Profitel had hoped for. They implemented the cutbacks as well as the new technology but the end result was not positive. Costs increased by five percent due to downsizing, the new technology brought in many customers but the customer satisfaction fell; Profitel was being labelled as offering the country’s worst broadband value; the company also did not do enough research on the other possible alternative technologies available before making their decision to invest in the company they chose. Employee morale decreased due to the workforce cutbacks along with the company’s public im...

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...t adopts the same strategy. Every organization functions differently and requires different outcomes from the strategies they implement. One company may want to increase their profit margin, while another may want to expand internationally. Both companies require different strategic approaches and they need to be flexible to achieve the end goal.

We also learned that when a company is making such a large decision like hiring a new CEO, they need to not just look at their experience, but also their leadership style. This person is going to be the one who your employees have to trust and listen too; you have to make sure the new hire is leading your employees in a direction that positively impacts the organization and their experience when they come to work.

References

McShane, S. & Steen, S. (2012). Canadian organizational behavior. Toronto: McGraw-Hill Ryerson.