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Top 10 risks in telecommunications 2012 - Lack of organizational flexibility - EY - Global

Top 10 risks in telecommunications 2012

Risk 10: Lack of organizational flexibility

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Operators need to develop more agile organizations that can execute their new strategies.

With their organizational structures now subject to various forces, including the shift to data services, the rise of partnering and the growing imperative for speed-to market, operators have already made significant changes to their organizations. But more are needed.

The changes to date include a concerted sector-wide move away from product-based structures and toward segment-orientated organizations. New business units have also been created to investigate and exploit new growth areas.

However, the forces affecting organizational structures continue to change and strengthen.

These forces include intensifying regulation of many incumbents' domestic businesses, fast changing levels of market maturity across different regions, and the need for in-market and cross-border efficiencies in fast changing areas of demand, such as enterprise ICT, smart services and fixed/mobile bundles.

Further refinements needed for new market dynamics

Given these forces, operators have to work out how they can best align their business units to maximize the economies of scale and scope in their geographic footprints.

Options for operators’ organizational structures

Segment-based Product-based
Consumer Enterprise Wholesale Fixed Mobile Other
Function-based Geography-based
Finance HR Operations Domestic Regional Int'l

To do this, they must revisit their combinations of regional and globally integrated structures and devise new organizational constructs that reconcile global strength with important local market factors — such as a unified customer view and collective purchasing power.

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