Tri State

Case Study presented by:Espartero, MariferFandino, Emma A.Gelacio, Jerome S.

Gratela, Maribeth R.Jimenez, Rhowena R.

Case Study presented to:Dr. Ramir Larino

18 September 2010

TRI-STATE TELEPHONE

TRISTATE Telephone – A case John Godwin, chief executive of Tri-state

Telephone, leaned back in his chair and looked at the ceilings. How was he ever going to get out of this mess? At last night’s public hearing, 150 angry customers had marched in to protest Tri-State’s latest rate request. After the rancorous shouting was over and the acrimonious signs put away, the protesters had presented state regulators with some sophisticated economic analyses in support of their case. Additionally, there were a number of emotional appeals from elderly customers who regarded phone service as their lifeline to the outside world.

Tri-State Telephone operated in three states and had sales of over $3 billion. During the last five years, the company had experienced a tremendous amount of change. In 1984, the AT&T divestiture sent shock waves throughout the industry, and Tri-State Telephone had felt the effects, as pricing for long distance telephone service changed dramatically. The Federal Communication Commission instituted a charge to the effect that customers should have “access” to long distance companies whether or not they were in the habit of making long distance calls. Consumer groups, including the Consumer Federation of America and the Congress of Consumer Organizations, had joined the protest, increasing their attention on the industry and intervening in regulatory proceedings wherever possible.

The FCC was considering deregulating as much of the industry as possible and Congress was looking over the commissioner’s shoulder. Meanwhile, the Department of Justice and Judge Harold Greene (both of whom were responsible for monitoring the AT&T divestiture) continued to argue about what business companies like Tri-state should be engaged in. In addition, technology was changing rapidly. Cellular telephones, primarily used in cars, were now hand held and could be substituted for standard phones. Digital technology was going forward, leading to lower costs and requiring companies like Tri-State to invest to keep up with the state of the art. Meanwhile, rate increases negotiated during inflationary 1970s were keeping earnings higher than regulators would authorize.

New “Intelligent” terminals and software developments gave rise to new uses for the phone network (such as using the phone for an alarm system), but as long as customers paid one flat fee, the phone company could not benefit from these new services.

Godwin’s company has recently proposed a new pricing system whereby users of local telephone services would simply pay for what they used rather than a monthly flat fee. All of the senior managers were convinced that the plan was fairer even though some groups who used the phone with notable frequency (like real estate agents) would pay more.

It would give the company an incentive to bring new services to their customers, and customers would be able to choose which ones to buy. None of them had anticipated the hue and cry from the very customers who would save money under the new plan. For instance, Godwin’s studies showed that the elderly were very light users of local service and could save as much as 20 percent under the new plan. After the debacle at the hearing the previous night, Godwin was unsure how to proceed. If he backed off the new pricing plan, he would have to find a different way to meet the challenges of the future – maybe even different businesses to augment company income.

Alternatively, the company could not stand the negative press from a protracted battle, even though Godwin thought that the regulators were favorably disposed toward his plan. In fact, Godwin himself believed the company should help its customer rather than fight with them.

Case Questions Who are the stakeholders in this case?Answer:The major stakeholders are the customer who

dictatesthe operation of the business.

Which stakeholders are most important?

Answer:Customers are the most important stakeholders.

Theyare the backbone of Tri-State Telephone, they are

thereason for the existence of the business.

What are the critical trends in Tri-State’s environment?

Answer: Tri-State Telephone has experienced a

dramatical change since the divestiture of AT and T. The rapid change in technology, evidenced by the introduction of cellular phones and their innovative uses has threaten the industry where Tri-State Telephone belongs. In addition, a case was raised against the company by their elderly customers with rate issue as the major matter.

Why do you think Tri-State’s customers are so upset?

Answer:

Tri-State’s customers where upset because of the recently proposed plan by the company regarding the pricing system of the service. The senior manager of the company failed to anticipate the possible response of some groups who used phone with notable frequency.

What should John Godwin do?Answer:

John Godwin must have analytical and rational market segmentation. He must group his market or customers based on their frequency and offer a specific pricing plan per market segment. By this, he can diversify his service offerings without compromising the welfare of the customers.

GOALS STRATEGIES

1. Create processes and models that are centered around customer services.

1. Applied life-long training.

1. Promote product development. 1. Operate a geographical information systems ( GIS ) data-based inventory of the tri state area’s people, places, and other community programs and services.

1. Increase project’s probability of success. 1. Support rural telecommunications initiatives.

4. Implement a community based advanced telecommunications infrastructure.

1. Get the community involved- people are the most important asset in accomplishing major networking projects.

5.Promote economic development, education, cultural and socio-economic growth through activities such as net working, telecommunications, television.

5. Conduct house to house survey, advertisements, fliers and other promotional materials.

FIVE YEAR DEVELOPMENT PLAN

PERT - Program Evaluation and Review TechniqueCPM - Critical Path Method

Activity Code Activity Description Predecessor(s) Expected time (in weeks)

A Idea generation None 4

B Screening of ideas A 3

C Market analysis B 6

D Financial analysis B 3

E Integrate marketing and finance C, D 5

F Select best pricing system E 3

G Implementation F 4

PERT – CPM AnalysisTri-State Telephone’s Introduction of new pricing system

Possible routes Time in weeks

ABCEFG 4+3+6+5+3+4 = 25ABDEFG 4+3+3+5+3+4 = 22

Network diagram

Optimum Completion Time (OCT) or est. project duration = 25 weeksCritical path (CP) = ABCEFGCritical activities (CA) = A,B,C,E,F,G

SWOT Analysis

•Tri-State is committed to maintain the highest industry standards in the communications field with quality craftsmanship and prompt response time for installation, maintenance and repairs.

• provide their customers with the best service at a competitive price.

•employs only the most competent workers who are trained to deal with the public in a friendly, courteous manner.

SWOT Analysis

•Tri-State is committed to maintain the highest industry standards in the communications field with quality craftsmanship and prompt response time for installation, maintenance and repairs.

• provide their customers with the best service at a competitive price.

•employs only the most competent workers who are trained to deal with the public in a friendly, courteous manner.

•It will make easy for people to commute to jobs, going to shopping and touring around the city•It will give additional job to the residence•It will open opportunities for other business in the area

•Lack of expertise in handling the budget may cause overstated expenditure•Poor quality of the construction might cause additional operating cost•Excessive manpower would result high overhead

What is PERT?PERT – stands for Project Evaluation & Review

Techniques

It is a business technique use in a business transaction’s complex problem that requires series of activities, some of which may be performed sequentially and others that can be performed in parallel with other activities. This collection of series and parallel tasks can be modeled as a network.

What is a PERT Chart?It is a chart that derives the data from the

formulated series of activities enumerated in the project/program evaluation and review technique.

The PERT CHART may have a multiple pages with many subtasks that is interrelated to each activities of programs.

Examples of PERT CHART

Steps in PERT Planning ProcessIdentify the specific activities and milestones.Determine the proper sequence of the

activities.Construct a network PERT ChartEstimate the time required foe each activity.Update the PERT chart as the project

progresses.

What are the Benefits of PERT?Expected project completion time.Probability of completion before a specified

date.The critical path activities that directly

impact the completion time.The activities that have slack time and that

can lend resources to critical path.Activity start and end dates.

What are the Limitations of PERT?The activity time estimates are somewhat

subjective and depend on judgment.Even if the activity times are well-estimated,

PERT assumes a beta distribution for these time estimates, but the actual distribution may be different.

Even if the actual distribution assumption holds, PERT assumes that the probability distribution of the project completion time is the same as that of the critical path.

Project Evaluation Review Technique

PERT Activities

Description of ActivitiesImmediate

PredecessorTime (in

days)

A advertise the collectors hiring - 7

B ask referrals from friends - 5

C receiving application A, B 6

D Interviewing applicants C 4

E recruitment of applicant D 2

F Training E 15

G Scheduling F 2

PERT CHART A

/¯¯¯¯7¯¯¯\

Start OO___C____o____D_____o____E______o____F______o_____G_______o

\____B____/ 6 4

2 15 2

'5

CRITICAL PATH METHOD, CPMIn 1957 the Critical Path Method was

developed as a network model for project management. CPM is a deterministic method that uses a fixed time estimate for each activity.

While CPM is easy to use understand and use, it does not consider the time variations that can have a great impact on the completion time of a complex project.

Determining the Critical PathThe Critical Path is determine by adding the

times for the activities in each sequence and determining the longest path in the project.

The critical path determines the total calendar time required for the project. If activities outside the critical path speed up or slow down(with limits),the total project time does not change. The amount of time that a non-critical path activity can delayed without delaying the project is referred to as SLACK TIME.

Quantities of CPMif the critical path is not immediately obvious, it may helpful to determine the ff. quantities of cpm.

ES –Earliest Start timeEF – Earliest Finish time

LS – Latest Start timeLF –Latest Finish time