Theperformance of different companies is influenced by factors that arefound in their external environment or by their internal environment.TEOCO is a technology company that was founded in the year 1994, andit currently specializes in the production of software fortelecommunication companies (Calo, Roche & Shipper, 2009). TEOCOhas been under the leadership of Atul Jain, a conservative CEO, sinceits foundation. This paper analyzes the external forces, internalorganization that affect TEOCO’s performance, how TEOCO has beenresponding to a competitive environment, strengths as well as theweaknesses of the CEO’s management style, issues that are expectedto arise from TA’s investment in the company as well as theincorporation of TTI into the corporate culture of TEOCO, and finallythe possible challenges that are TEOCO is likely to face as it triesto retain its strong corporate culture.
Externalforces and industry conditions
Theperformance of TEOCO has been influenced by three major types ofexternal forces since it was founded. The first and the mostsignificant type of external force is competition. From the case,TEOCO operates in an industry that is highly fragmented andcompetitive. The company faces stiff competition from different firms(such as Razorsight and Subex) in each of its segments, which haslimited TEOCO’s capacity to achieve its desired market share andprofitability (Calo, Roche & Shipper, 2009). However, the natureof the industry (software development) keeps large companies awaysince there is no exponential growth for them to exploit. This meansthat TEOCO competes with companies of its size of small in size.Secondly, TEOCO operates in an industry that is characterized by wellknown clients who can be clearly identified. This has given TEOCO anopportunity to interact with its clients and demonstrate theuniqueness of its products, thus increasing customer loyalty and asustainable performance. Third, the technology industry, especiallythe software development sector is characterized by a high demand forinnovative solutions. This has forced TEOCO to invest heavily inresearch and development, which has helped the company deliverproducts that address the specific needs of its clients, whileincrease the cost of operation on the other hand.
Internalorganization and culture
Theculture and internal organization has influenced TEOCO’sperformance in several ways. First, the company used a conservativeapproach for approximately fifteen years, which limited its growthcapacity. The CEO, Atul avoided using venture capital to financecompany ventures, which denied the company the opportunity to growfaster (Calo, Roche & Shipper, 2009). However, TEOCO’s heavyinvestment in areas of research and development is among the keyinternal strategies that has helped it develop competitive solutionsthat has kept the company performing better in spite of the stiffcompetition in the industry. Moreover, TEOCO has an effectiveleadership style that gives it an opportunity to integrate the ideasof all stakeholders in its strategies.
Fromthe case, TEOCO’s internal culture is based on the notion of sharedsuccess, which means that the company considers its employees as partof its success. Therefore, employees work in teams and theircontributions in the process of decision making counts. Theparticipative leadership style has stabilized TEOCO’s performancesince each of the stakeholders takes the success or the failure ofthe organization both as a personal or a group responsibility. Apart from the use of a strong leadership style, the top leaders(including the CEO, president, the Company’s vice president) have alot of experience in business and in the technology industry. Thishas allowed the company to enhance its performance continuously.
Strategicresponse to a competitive environment and the internal capabilities
TEOCO’smanagement is aware of the negative impact that competition has onthe company’s performance. To this end, the management has beenresponding to the company’s competitive environment in differentways in order to safeguard TEOCO’s going concern. First, productdiversification has allowed TEOCO to operate in different segments,which buffers its performance from a stiff competition that comesfrom each individual segment. For example, TEOCO competes withdifferent companies in the cost management segment, least costrouting, and revenue assurance segments. This allows TEOCO to surviveon revenue generated from other segments when competition in onesegment becomes stiff.
Secondly,acquisition is another effective strategy that TEOCO has been usingto respond to competition. From the case, TEOCO has been growingthrough the acquisition of competitors who have a different customerbase as well as other firms (such as TTI) operating in differentlines of business. Third, an effective internal cost managementstrategy has helped TEOCO control the cost of operation, which has inturn given the company an opportunity to protect its liquidity in acompetitive market. Most importantly, TEOCO internal capability,which can be characterized by a high level of collaboration amongemployees and effective talent management, has contributed towardsthe company’s ability to develop innovative solutions (Calo, Roche& Shipper, 2009). Innovative solutions have allowed TEOCO toincrease its market share and safeguard its future growth.
Strengthsand weaknesses of Jain’s management style
Jain,TEOCO’s CEO, uses a participative management style, which requiresthe involvement of all stakeholders (including employees) in decisionmaking. This management has numerous strengths and weaknesses. Forexample, the management style has enhanced the satisfaction ofemployees with their current jobs. This can be confirmed by theJain’s ability to retain the company’s experienced employees.Secondly, TEOCO employees feel motivated by the opportunity that thecompany has given them to take part in decision making. For example,Hilary, one of the company employees confesses that there is reasonto leave the current job to work in another company, which is anindication of motivated employees. Moreover, a participativeleadership has enhanced creativity and innovation at TEOCO (Calo,Roche & Shipper, 2009). This is confirmed by the company’sability to develop the most innovative solutions in a competitiveindustry. By motivating employees and retaining the most experiencedones, TEOCO has been able to enhance its overall effectiveness andthe ability to respond to competition in the industry. One of thelimitations of the participative leadership style is the slowdecision making process. Although TEOCO has managed to grow amidst astiff competition, the decision to include all employees as thecompany owners coupled with the conservative management approacheshave contributed towards a slow growth rate of TEOCO.
Issuesthat might arise following TA’s investment in TEOCO
TEOCOis likely to experience one major issue following TA’s investment.First, the first issue is associated with the difficulty of retainingexperienced members of staff and core competencies of the acquiredorganization. TA and TEOCO have been operating on different corporatecultures, which might increase the risk of dissatisfaction ofexperienced staff who have been working for TA (Calo, Roche &Shipper, 2009). These employees might decide to leave the company andlook for new employment opportunities elsewhere.
Theissue of retaining experienced members of staff and core competenciescan be addressed by fostering transparency between TA and TEOCO.According to Allen (2015) maintaining transparency during and afterthe process of acquisition clears all misunderstandings among thestakeholders, which increase chances for retention of experiencedemployees as well as the core competencies. For example, TEOCO mayassure employees of TA that the corporate culture and other practicesthat they are used to will not be altered.
Issuesthat might arise when incorporating TTI into the culture of TEOCO
Adecision to incorporate TTI into the corporate culture of TEOCO islikely to be faced with two major issues. First, chances for employeeresistance are quite high given that the two organizations are basedon two cultures that are completely different. For example, TEOCO’scorporate culture is based on the concept of shared success, whileTTI’s success is determined by the management (Calo, Roche &Shipper, 2009). Employees from TTI might find it difficult to adaptto a set of values that guide employees at TEOCO. Secondly, staffturnover might increase while incorporating TI into TEOCO. Riskaverse might fear to face the anticipated change in corporate cultureand decide to leave, instead of risking their working environment. Inaddition, the fear of the unknown might discourage TTI employees,which will in turn reduce their productivity.
Resistancefrom employees to a change in the corporate culture can be overcomethrough training. According to Smollan (2011) training programs helpemployee’s understand the need for change and how the change willimpact their work, thus reducing the level of resistance. Similar tostaff resistance, the lack of employee motivation and the risk ofturnover can be addressed through training (Smollan, 2011). TEOCOshould embrace the concept of transparency by ensuring that TTIemployees understand the possible impact of the acquisition andincorporation of their organization into TEOCO on their job and theworking environment.
Possiblechallenges in maintaining TEOCO’s corporate culture
TEOCO’scorporate culture has always been based on a conservative approachwhere it has been avoiding risky sources of capital. However, thehigh demand for capital to finance its growth has forced TEOCO to useventure capital, which resulted in the introduction of new directorsinto the top executive leadership team (Calo, Roche & Shipper,2009). This implies that the new investors would like to see acorporate culture that will ensure that their investment is safe andgives the highest possible returns. This might pressure TEOCO tochange its corporate culture in order to eliminate undesirablevalues, which might in turn affect the morale of the currentworkforce. Apart from the introduction of new managers who might havedifferent business objectives and strategies, the acquisition of neworganizations implies that TEOCO has been adopting new teams ofemployees who believe in different values. This implies that a largenumber of employees from acquired firms may not be able to subscribeto a set of values set by TEOCO, which might force the management tochange those values or face the risk of losing some competentemployees from its newly acquired firms.
TEOCOoperates in the technology industry, but specializes in theproduction of software for telecommunication companies. TEOCO’sperformance is affected by numerous external factors that include astiff competition, a high demand for innovation, and the nature ofthe technology industry. In addition, TEOCO’s capacity to manageinternal costs, diversify its investment, invest in research andadjust its investment has allowed it to fit in the industry. However,the introduction of new managers and workforce followed a series ofacquisitions might force TEOCO to adjust its corporate culture thathas played a critical role in helping the company maintain itscompetitive advantage.
Allen,T. (2015). Mergersand acquisitions: The four greatest risk factors for leaders andmanagers.Columbus: ARVis Institute.
Calo,T., Roche, O. & Shipper, F. (2009). Principledentrepreneurship and shared leadership: the case of TEOCO.Salisbury: Salisbury University.
Smollan,R. (2011). Engaging with resistance to change. Universityof Auckland Business Review,113 (1), 12-16.