Enviromental Factors Affecting Nortel Networks

Have a little read: ... Enviromental Factors Affecting Nortel Networks Executive Summary This report will examine some of the main environmental factors affecting Nortel Networks and outline how management has taken these factors and influences in its corporate operations and decisions. The areas that will be discussed include the different types of environment, stakeholders and the effect environment has on strategic change. It will also look at a number of theories in these areas and prove them with Nortel Networks environment. The report will also relate each area in terms of the others and how they are interconnected. Contents Introduction ................................................................................................ 4 Analysis ..................................................................................................... 5 Conclusions ................................................................................... 18 Recommendations .................................................................................... 20 Appendices ................................................................................................ 21 Bibliography ............................................................................................. 30 Introduction Using definitions from Baron, Bartol and Bennett, the analysis will show how environmental factors are the fundamentals behind strategic change. The analysis will show the effect of stakeholders at Nortel Networks and the influences they have had over decisions using models from Freeman, Borgattis, Keuing and Mintzberg. The report will also recognise the impact of strategic change on culture using strategy from Parnell, Lester and Menefee. It will also outline the effect of change adaptability on the managerial task by showing characteristics depicted by Porter and Carnall. Analysis Definitions According to Baron (1996), the role of management is to define market and non-market strategies. It's clear that these two are related and can be seen at Nortel Networks. The corporation's activities in its market environment have in the past generated nonmarket issues and have stimulated action that has reshaped the nonmarket environment. For example, Nortel's concentrated R & D efforts in the sixties led to the discovery of fibre optics as a means of high-speed communications. This in turn has led the nonmarket environment moving from traditional voice technology of copper to optical fibre as a quicker, cheaper and more reliable way of transporting information. Nonmarket issues can also shape the market environment. For example the fundamental change above has led Nortel to move it's customers away from traditional forms of communications to Fibre Optic. Bartol (1998) defines the types of environment into mega environment and task environment. The mega environment have been categorised by a number of analysts (Johnson and Scholes, 1993) and Bennett (1977) into political, economic, technological and socio-cultural factors (PETS), which influences organisations, their strategies, structures and mean of operating. The table below depicts examples of these factors for Nortel.  Another general consensus amongst writers including Huczynski and Buchanan, 1991, McCalaman and Paton, 1992 and others in that the above act as triggers or sources of change. They all conclude that organisations not only have to put up with external forces of change, but must cope with internal forces of change too. Over the last six months Nortel have realigned internally to refocus the business on core competencies. There have been a number of changes. There is a new CEO, job groups have been redesigned and a reduction in the workforce. These changes can also be seen as triggers or as reactions to change.  The diagram, above, illustrates Nortel's Task and Mega Environment as defined by Bartol (1998). Farnham (1995) pulls all these theories together in his analytical framework for the corporate environment. It defines how society's limited economic resources are converted and transformed, through planning, managing and marketing, into the creation of the new resources which can loosely be described as 'wealth' and 'welfare'. (See overleaf)  Stakeholders and Influencers According to Freeman (1984, p.32), the set of entities in an environment that plays a role in the achievement of the organisations objectives or which are affected by them are called stakeholders. Adapted from Carroll (2000), includes lievel of influence on strategy as a percentage Borgattis's (1996) definition would categorise Nortel Networks' stakeholder as well connected. The corporation cannot represent itself differently to each one. To the detriment of the organisation, if the stakeholders bonds to each other are stronger than those of the organisation, then the stakeholders may side with each other against the organisation, and won't act in ways that negatively affect other stakeholders. Over the last six months the stakeholders have bonded more and have forced Nortel to make strategic changes against the wishes of the organisation. Keuing (1997) argues the case for this corporate social responsibility and depicts it in the table below: Savage, Nix, Whitehead and Blair (1991) also prove that this type of stakeholder is strong in the Nortel environment. They describe them as a Mixed blessing stakeholder. These types of stakeholders need to be managed. In the case of Nortel Networks, the management have failed to satisfy minimally the needs of marginal stakeholders and failed to satisfy maximally the needs of supportive and mixed blessing stakeholders. If they had been satisfied then the latter would have supported Nortel