Topic > Onetel Case Study - 1655

BackgroundOne.Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). Initially, he tried to take advantage of the deregulation of the telecommunications industry by reselling capacity from other networks and making money through stock market speculation. Rich and Keeling sought to increase the company's stock rather than profit from it (Cook, 2001). Initially, One.Tel developed a culture of strong teamwork and solidarity. There was no hierarchy in the company structure. However, the dissonance of its culture and system is the main factor that led to the decline of One Tel. The failure of One.Tel had been signaled by the sharp decline in its stock price in 1999 (Cook, 2001). By 2001, OneTel no longer had cash to pay its expenses and was in huge debt. The business expands too quickly that the billing system can't handle it and customers don't receive their bills. Jodee Rich, as the main founder of the company, did not pay attention to any reported problems. All these factors meant that One.Tel could not resist the moment of crisis. Major Issues The major issues faced by OneTel are that the business structure has not been developed which leads to ineffective communication. In its operation, One.Tel adopts high centralization as managers only do what Jody tells them. It creates leadership turnover as he liked to promote the yes man and humiliate managers who brought problems to his attention, so there is high staff turnover. He also did not accept any opinion from others and used his authority to run the company. Furthermore, to acquire new customers, it focused too much on advertising. It was too autocratic, which made employees unable to exercise their problem-solving ability. Additionally, One.Tel had low complexity driven by unclear job tasks and responsibilities. Since there was no organizational chart, employee ratios could not be determined, and job descriptions were ambiguous. Staff shortages, which often happen, and many customer calls went unanswered, led to long-term declines in sales, as there was frustration among customers. No rules and procedures in handling customer complaints and accounts proved that One.Tel lacked formalization in functioning. One.Tel also did not properly operate its divisions. There was no correct procedure in staff training and young and inexperienced staff were recruited. It also had a disorganized billing system and financial account.