Answer to Question #211751 in Marketing for saleemaslam

Question

NTT Communications has often been referred as the gold standard of the telecommunications industry. As a Fortune 500 company with over 30 subsidiary companies in the Asia Pacific, Americas and in Europe, the conglomerate specializes in providing consultancy, architecture, security and cloud services to optimize the information and communications technology (ICT) environments of enterprises.

 

Due to high property prices and the incentive for companies to reduce costs by outsourcing their IT services, NTT became the first to recognize this opportunity to enter the data services market in Hong Kong. As such, NTT’s Hong Kong branch enjoyed substantial market leadership, becoming the largest data service provider in Hong Kong leading to massive revenues and sales growth of 20% each year since 2008. This in turn, lead to rapid internal growth of the company, with their staff force doubling from 200 to 400 in Hong Kong since 2014.

 

With this success, the company became more defensive and protective of information. Expansion strained resources across the organization and slowed response time. NTT Hong Kong’s CEO, Mr. Maeda, was quoted as acknowledging “Quite frankly, I fear the pace at which we have grown may have been too quick.”

 

In 2015, sales began to slow down due to an increase in competition by companies opening their own data centers as well as from other competing service providers. The Head of Global Business at NTT’s Tokyo Headquarters, Mr. Ozaki, became concerned with the situation, and demanded NTT Hong Kong to continue setting its sales target growth at 20% even though Mr. Maeda already explained that the target was unrealistic and unachievable and that the company should consider re-adjusting its strategy.

 

In recognition of Mr. Maeda’s previous success in achieving 7 consecutive years of double-digit sales growth, the CEO of NTT in the Tokyo Headquarters promoted him to become the new Head of Global Business at the NTT Headquarters, whilst Mr. Ozaki was sent to Hong Kong replace Mr. Maeda as the new CEO of NTT Communications in Hong Kong. Committed to achieving the targets he set for NTT Hong Kong prior to his new assignment, Mr. Ozaki planned to change the entire structure of the organization in order to boost sales while streamlining processes that he thought were redundant.

 

When he arrived at the company, he developed a new organization structure within 2 weeks upon his arrival. His main intention was to increase the efficiency of the Hong Kong sales operations whilst lowering costs. Mr. Ozaki had noted that he felt that the sales teams lacked the technical knowledge required to handle difficult clients. Frequently, sales teams would work with clients by collaborating with NTT’s engineering divisions for technical advice, and he felt that this process could be streamlined if engineers were placed in more front-line sales roles.

 

As a result, in the new organization structure, staff in 3 engineering product divisions were given new job titles as sales consultants, and tasked with the responsibility to building relationships with key clients. This change caused anguish to the existing sales teams. Sales staff felt there was increased competition within themselves, and they felt work-overloaded as the engineers no longer had the available work resources to answer enquiries by the sale teams since they had to work on achieving their own sales targets too. The original engineers also felt pressured, due to their new client-facing roles. Within 3 months since the induction of his first sales structure change, 50% of the staff from the 3 original engineering divisions left the company. There was also a resulting 20% in complaints received by customers.

 

Given the departure of so many engineering staff, Mr. Ozaki could not afford to lose more employees so he immediately reverted the remaining engineers to their original positions, and the existing sale staff were also tasked to go back to continuing with their previous process of consulting with the engineers while handling projects with their clients.  

 

Nonetheless, this change marked the beginning of a series of other restructurings that also took place for the Data Service Operations and Product Divisions, each with the goal of removing jobs deemed redundant and streamlining their respective operations. The structures for each division continued to be altered every 2 months to fine-tune his ideal structure, and it was not uncommon for some staff to change bosses or title multiple times within 1 year.

 

Throughout the changes, many employees had actually voiced out their concerns over the frequent job changes to their respective managers, however senior management were reluctant to pass the feedback up to Mr. Ozaki. Nonetheless, this did not stop employees from regularly sharing information amongst themselves regarding upcoming changes in the organizational structure.

 

NTT Hong Kong’s board of directors is composed of 15 Japanese men, all of whom originally worked at NTT’s Tokyo Headquarters. Although most employees actually have a line manager as well as a functional manager, overall authority tends to be deferred to management with roots tracing back to the Tokyo Headquarters.

 

All Hong Kong branch executives are assigned a Japanese boss to mentor them, and no NTT executive in Hong Kong is authorized to act on any new programs without the consent of Mr. Ozaki. It is not uncommon for senior management meetings to be conducted in Japanese, with Hong Kong executives left out of the decision-making process with the exception of 1 Hong Kong Director who is of Hong Kong descent but spoke Japanese and had originally worked at the Tokyo Headquarters. In essence, information is directed back to Japan where core decisions are made.

read it and answer 2 questions:

1.What are the core problems with NTT’s organization structure, leading to its challenges?

2.Make 1 suggestion on how to improve NTT’s organization structure/situation?\

 

 Note:

APA citations required (at least3)

words limit 550-650

Answer 1

Answer

Although several studies show that the NTT communications have a gold standard in the telecommunications industry, most of the studies do not have show the core problems with the NTT’s organization structure leading to its challenges. As can be seen from the history of Nippon Telecommunications, it was established in 1952 as a government-owned corporation to meet rapidly growing demands for fixed line telecommunication services. However, since decision-making at NTT were highly constrained by the government, it was difficult for the NTT organization to adjust to the environmental changes during the first half of the 1980’s hence it was incorporated as a private company in 1985. Further, According to Carucci, (2019) the NTT’s activities have been strictly regulated under the NTT law and was not only prohibited from entering international telecommunication markets, where only researchers and technology were exchanged with domestic carriers overseas, but also obliged to provide uniformly service in Japan even in rural areas where profitability could be low or even undesirable.

Furthermore, a major challenge that made NTT experience problems was the rise in competition by companies that opened their data centers and other competing service providers. Tran et al., (2010) stipulated a major challenge in the NTT organization structure's growth as its sales target was set at 20%, which MR Maeda explained that it was unachievable. In addition, the sales team lacked the technical knowledge that was required to handle difficult challenges (Root, 2010). Hence, the MR Ozaki noted that the sales team would work with the NTT’s engineering divisions for technical advice, and felt for technical advice and he felt that this process could be streamlined if engineers were placed in more frontline sales roles.

Besides, many engineering staff departed as they felt pressured due to their new client facing roles. This made Mr. Ozaki revert the remaining engineers to their original positions as he could not afford losing more employees. In general, to improve the NTT’s organization structure, the executives should come up with a better decision making process and stipulate strategies that are will be helpful to make the organization meet its goals and objectives.