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Global Communications: Benchmarking Research

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Benchmarking is a process in which organizations look at various aspects of their processes in relation to the best practice. Benchmarking allows organizations to develop plans on how to adopt such best practices in their respective environments while keeping a target of increasing the work performance. The common procedure of benchmarking is composed of the following: (1) Identifying the company's problem areas; (2) Identifying other industries that have similar processes; (3) Identifying organizations that are leaders in the respective market; (4) Surveying companies for measure and practices; (5) Visiting the leading companies (if the company allows) with the "best practice" to identify leading edge practices; (6) Implementing new and improved business practices.

In the Global Communications scenario the company faced the problem of having too much competition. There were local, long-distance and international markets all competing for the same business. The response from the senior leadership team was to initiate a growth plan through the introduction of new services. Through collaborating with satellite providers to offer video services as well as broadband capabilities, they decided to venture in that direction for their growth. The team also recognized that profitability would be met if cost-cutting measures were taken into affect. They knew that a lot of jobs would be downsized at current call centers that would be shut down. However, they did not approach the human resources department correctly causing bad chemistry with the worker's union. Global Communications did not completely look at the resolution of the blueprint at hand and found it difficult to deal with when implementing their growth plan. Many companies in our corporate world have faced similar issues where they reach debacles that were not clear when the creation of an idea occurred. Let us see what such companies did in order to overcome their problem statements.

Delta Airlines

After September 11, 2001, the commercial airline industry was traumatized. This was no different for Delta Airlines. In addition to increasing fuel prices and high labor costs, Delta saw a dramatic drop in profits. With 20.5 billion dollars in debt, Delta Airlines filed for Chapter 11 (bankruptcy) in September, 2005. Delta needed to find a way to get out of bankruptcy. It still functioned and did not cease in any of its day-to-day operations. It also wanted to get back to a place where it could again bring in profits and revenue.

Due to the effects of 9/11, Delta decided to outsource 1,000 call center jobs to India. Delta also decided to expand it services to the international markets of Europe and Latin America.

By redirecting calls from U.S. customers to call centers, they were able to save a massive amount of money. "The Indian operations saved $25 million in 2003, enabling the No. 3 U.S. air carrier to add 1,200 positions for reservation and sales agents at home" (Pine and Murray, 2007). According to Delta, even with the outsourcing of jobs, not one of their employees lost their jobs in the process. Furthermore, they saved a critical amount of money and eventually saw growth from their business plan.

BellSouth Telecommunications, INC.

Just like Global Communications, BellSouth needed to adjust as technology was becoming more complex.

In 1997, BellSouth enforced a business plan to outsource over 3,000 jobs from its IT department. These jobs would be moved with the assistance of their outsourcing partner, Accenture Ltd., overseas. More particularly, they would be moved to India.

As a result, BellSouth was able to save over $275 million. Unfortunately, about a year later, on May 13, 1998, BellSouth was sued by many of the employees that lost their jobs due to the outsourcing.

Lego

Lego brand of toys has been in business since the 1930's and creating plastic building bricks since the 1950's. The evolution of electronic and computer games in the 1990's affected all traditional toy makers but Lego's business structure led to major losses. According to Schwartz (2006), Lego was still

"Privately held and still majority-controlled by Christiansen's heirs, Lego tried and failed to expand into everything from clothes and computer games to Lego theme parks in the U.S. and Europe. By 2004, Lego was losing hundreds of millions a year and the company looked as if it might go the way of a once-beloved game now consigned to the attic."

For Lego to survive, the production costs and business decisions needed to change.

In 2006, Lego hired a new CEO that decided to make changes that were similar to what Global Communications did. The CEO has a three-year plan to outsource 300 jobs from the US to Mexico as well as 900 from Denmark to the Czech Republic to save in production costs. In addition, the 8000-employee work force will also be reduced to 3000 in three years (Personnel Today, June 27, 2006). The changes also included selling off its theme parks in 2005 for 500 million dollars.

In 2004, Lego took a loss of $300 million according to Schwartz (2006). As these changes have occurred and there have been massive decrease in manufacturing and production costs, Lego was able to have an $87 million profit in 2005 (2006). In the next two years, this should increase with new relationships being built around various cartoon and movie themes and a continual reduction in employee costs and streamlined production.

Ford

The "Big Three" in the automotive industry has always been Ford, Chrysler and General Motors. Each are facing major financial losses as well as positioning in the industry secondary to globalization and production costs. They are losing out to foreign competitors because of a lack of innovative new products and high employee costs. Additionally, American car manufacturers are dealing with the a strong union that has led to elevated pension and healthcare costs that it's competitors do not have as a cost. Fords healthcare cost is $3.4 billion dollars per year whereas its Japanese competitors do not have those financial burdens (Plunkett Research).

As a result of the above factors, Ford eliminated 6000 salaried positions in 2006 with a plan to increase that to 30000 positions by 2012. This is also part of Ford's overall globalization plan in which new products will be produced and manufactured overseas resulting in an overall decrease in manufacturing and employee costs. All three of the American auto manufacturers are in the same predicament and are making similar changes.

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