Effectiveness and Efficiency of British telecom

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BT’s origins date all the way back to the inception of the first telecommunications companies in the United Kingdom, starting with the introduction of the first commercial telegraph service in the early nineteenth century. As these companies amalgamated, were taken over or collapsed, the survivors were eventually transferred to state control under the Post Office and ultimately to the privatised British Telecommunications plc. On 19 July 1982, the Government formally announced its intention to privatise British Telecom with the sale of up to 51 per cent of the company’s shares to private investors.

British Telecom’s flotation was the first in a series of privatisations of state-owned utilities throughout the 1980s and into the 1990s. The new BT is structured so that BT Group plc provides a holding company for the separately managed businesses which make up the group. These are BT Retail, BT Wholesale, BT openworld and BT Ignite, each of which has the freedom to focus on its own markets and customers. By understanding their customers better, they can move quickly to seize opportunities and meet challenges.

I will be looking at BT Retail in particular today and looking at the main role and the aims that the organisation attempts to achieve. BT Retail is the UK’s largest communications service provider, by market share, to the residential and business markets. It is the prime channel to market for the other businesses in the BT Group and it trades under the BT label. The delivery of customer satisfaction is the cornerstone of BT Retail’s strategy, and its key objective is to provide a significantly better service experience than any of its main competitors.

At the same time as working to bring dramatic improvements in the quality of service delivery, BT Retail is also focusing on reducing costs through greater efficiency and productivity. In the residential fixed-call voice market, BT Retail has stabilised market share at 73 per cent, with the figure remaining at the same level for more than a year. As you can see from looking at the profits and the number of employees that Bt employed at those times in the early eighties that they were not very efficient, by using the ratio Profit/the number of employees = the profit that each employee contribute.

As the profits were increasing in the early 1990s, the number of employees that were being employed were decreasing, several reasons can be identified for this with the main reason being widespread use of computerised equipment being implemented throughout the company that enabled the company to maintain better levels of efficiency that had been seen in the previous decade. Looking at the slide which represents the number of Uk lines that Bt operates, it can be seen that over the past two decades the number of Uk lines has increased at a steady rate of approximately 5 per cent every year.

Does this increase mean that BT is being effective in its operations??? One argument would be yes they are and it could be noted that BT adopted several aggressive marketing campaigns over this period that might have raised awareness amongst its potential customers but on the other hand, it could be argued that it was natural technological progression that had nothing to do with what BT was offering and had more to do with how the world was changing its attitudes to technology. To enable Bt to operate its services effectively, it has to rely heavily on call-centres to support its customers.

There are several measures of efficiency that can be used to identify how efficient or inefficient they are. One obvious ratio would be : Number of calls per hour / number of operators available = Number of calls per hour per operator. However it has to be said that these figures would be different depending on what department is being looked at, for instance someone who was working in the faults department would take considerably less calls than for say someone working in directory enquiries who on average would be taking a call every 20 seconds.

By analysing the number of calls that are taken throughout the day, the managers at BT could establish how many operators are needed at differing times throughout the day, for example, the demand for the 151 service which is the business customer service department would be significantly lower at the evenings and weekend and for BT to effectively use its Labour, it would reduce the number of people working at those times.

A department such as Faults would have a different efficiency target to try to achieve, the promise that Bt makes to its residential customers is that if they have a fault, by the next working day they will have fixed it. This is not always going to be possible and when this promise is not met it will result in complaints and people generally not being happy with the service that has been offered. Ways in which Bt could try to improve this is by training more engineers to be able to do the job, although it could be said that this would result in improved effectiveness because more customers would be happy

Unpopular as it is, a way of increasing efficiency levels within an organisation can be achieved with job cuts which in turn would lead to more work for the workers that are left, but another way in increasing efficiency levels within call centres can be seen by paying lower wages to workers in countries such as India, the business would be getting the same labour for cheaper rates but would this be as effective as employing workers in your own country??

For any company that operates in the service industry, being efficient cannot be looked at being the only priority that the business has. The customers perceptions and expectations of the business are what make the business effective, for example if the company has a good reputation of customer service, this in turn will be effective because this will attract customers to the business who enjoy certain levels of good customer service. Ways in which a company like BT could measure its effectiveness with regards to its customers and prospective customers is by using one of two ratios :

Number of new customers/total number of customers = percentage of customers that are New. Or Number of customers leaving BT/total number of customers = percentage of customers that have left BT for a competitor. The first ratio that looks at the number of new customers that BT might have gained throughout a year could be for a number of reasons such as a successful marketing campaign, price cuts or competitors not being able to satisfy those customers needs.

The ratio that looks at the number of customers leaving BT is more important than the number of new customers that Bt may attract, this is because those customers are leaving BT for a reason, it would be crucial for a company like BT to identify those reasons and attempt to rectify them if possible. It has been said that it costs 5 times as much to attract a new customer than it does to keep an existing customer, by identifying the reasons that makes customers feel disgruntled and eventually leave.

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