Saturday, March 2, 2019

By Steven L. McShane, The University of Western Australia

As a formerly g all overnment-owned earpiece monopoly, Profitel enjoyed many decades of stripped contender. Even today as a publicly traded enterprise, the societys almost exclusive control over surround copper wire across the country keeps its service mar- gins above 40 percent. Competitors in telephone and DSL broadband continue to rely on Profitels wholesale business, which generates substantially more profit than similar wholesale serve in many other countries.However, Profitel has stiff competition in the cellular (mobile) telephone business, and other emerging technologies (voice- over-Internet) threaten Profitels dominance. Based on these threats, Profitels gore of directors decided to hire an outsider as the new head executive. Although several qualified candidates expressed an interest in Profitels top out job, the jump on selected Lars Peeters, who had been chief executive officer for six years of a publicly traded Euro- eulogy telephone company, followed b y a brief stint as CEO of a cellular telephone company in the United States until it was acquired by a larger firm.Profitels board couldnt believe its commodity fortune Peeters brought extensive industry knowledge and global experience, a high-energy energy level, self-confidence, decisiveness, and congenial yet strongly persuasive interpersonal style. He also had a unique presence, which ca utilise people to pay attention and wish his leading. The board was also impressed with Peeters strategy to bolster Profitels profit margins.This included heavy investment in the latest tuner broadband engine room (for both cellular telephone and computer Internet) before competitors could make water a foothold, cutting costs through layoffs and reduction of peripheral services, and put pressure on government to deregulate its traditional and emerging businesses. When Peeters draw his strategy to the board, one board member commented that this was the same strategy Peeters used in his p revious dickens CEO postings. Peeters dismissed the comment, saying that individually situation is unique. Peeters lived up to his reputation as a decisive executive.Almost direct after taking the CEO job at Profitel, he engage two executives from the European company where he previously worked. Together over the next two years they cut the workforce by 5 percent and rolled out the new wireless broadband engineering science for cellphones and Internet. Costs increased somewhat due to downsizing expenses and the wireless technology rollout. Profitels wireless broadband subscriber list grew quickly because, in spite of its very high prices, the technology faced limited competition and Profitel was pushing customers off the older technology to the new network.Profitels customer sat- isfaction ratings fell, however. A national consumer research group reported that Profitels broadband offered the countrys worst value. Employee morale also declined due to layoffs and the companys pu blic image problems. Some industry experts also storied that Profitel selected its wireless technology without evaluating the alternative emerging wireless technology, which had been gaining ground in other countries. Peeters aggressive campaign against government regulation also had unintentional consequences.Rather than achieving less regulation, criticizing government and its telecommunications regulator made Profitel look even more arrogant in the eyes of both customers and government leaders. Profitels board was troubled by the companys lacklustre share price, which had declined 20 percent since Peeters was hired. Some board members also worried that the company had trifle on the wrong wireless technology and that subscription levels would stall far down the stairs the number necessary to achieve the profits stated in Peeters strategical plan.This concern came closer to reality when a foreign-owned competitor won a $1 billion government contract to improve broadband servic es in regional areas of the country. Profitels proposal for that regional broadband arouse specified high prices and limited corporate investment, but Peeters was confident Profitel would be awarded the contract because of its market dominance and existing infrastructure with the new wireless network.When the government decided otherwise, Profitels board fired Peeters along with two executives he had hired from the European company where he previously worked. Now, the board had to figure out what went wrong and how to avoid this problem in the future. Questions 1. Which location of leadership best explains the problems experienced in this boldness? Analyze the case using concepts discussed in that leadership perspective. 2. What can organizations do to minimize the leadership problems discussed above?

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