PM Profitel Inc. Case

As a formerly politics-owned address monopoly, Profitel enjoyed umteen decades of minimal competition. correct today as a publicly traded enterprise, the companys almost exclusive control over telephone copper wiring crossways the state keeps its profit mar- gins to a higher place 40 portion. Competitors in telephone and digital subscriber line broadband continue to rely on Profitels wholesale business, which generates intimately more profit than similar wholesale services in many some some other countries.However, Profitel has stiff competition in the cellular (mobile) telephone business, and other emerging technologies (voice- over-Internet) threaten Profitels dominance. Based on these threats, Profitels progress of directors decided to hire an outsider as the new chief executive. Although some(prenominal) qualified candidates expressed an interest in Profitels top job, the bill selected Lars Peeters, who had been CEO for six years of a publicly traded Euro- pean tel ephone company, followed by a brief stint as CEO of a cellular telephone company in the United States until it was acquired by a larger firm.Profitels progress couldnt believe its good risk Peeters brought extensive industry knowledge and global experience, a high-octane get-up-and-go level, self-confidence, decisiveness, and congenial yet strongly persuasive interpersonal style. He also had a unique presence, which caused people to pay attention and respect his leaders. The board was also impressed with Peeters system to bolster Profitels profit margins.This include heavy investment in the latest radiocommunication broadband engineering science (for both cellular telephone and computer Internet) before competitors could gain a foothold, cutting costs through layoffs and reduction of peripheral services, and putting wedge on government to deregulate its traditional and emerging businesses. When Peeters described his strategy to the board, one board member commented that this was the same strategy Peeters used in his previous two CEO postings. Peeters dismissed the comment, saying that each postal service is unique. Peeters lived up to his reputation as a decisive executive.Almost immediately aft(prenominal) taking the CEO job at Profitel, he hired two executives from the European company where he previously worked. Together over the nigh two years they cut the workforce by 5 pct and rolled out the new wire slight broadband technology for cellphones and Internet. cost increased somewhat due to downsizing expenses and the wireless technology rollout. Profitels wireless broadband subscriber list grew quickly because, in offend of its very high prices, the technology faced limited competition and Profitel was get-up-and-go customers off the older technology to the new network.Profitels customer sat- isfaction ratings fell, however. A national consumer research group reported that Profitels broadband offered the countrys worst value. Employee morale a lso declined due to layoffs and the companys public image problems. Some industry experts also noted that Profitel selected its wireless technology without evaluating the alternative emerging wireless technology, which had been gaining ground in other countries. Peeters aggressive campaign against government regulation also had unintended consequences.Rather than achieving less regulation, criticizing government and its telecommunications regulator made Profitel look even more arrogant in the eyes of both customers and government leaders. Profitels board was lush by the companys lacklustre share price, which had declined 20 percent since Peeters was hired. Some board members also worried that the company had bet on the wrong wireless technology and that subscription levels would stall far below the turn necessary to achieve the profits stated in Peeters strategic plan.This vexation came closer to reality when a foreign-owned competitor won a $1 billion government abridge to impr ove broadband services in regional areas of the country. Profitels proposal for that regional broadband upgrade condition high prices and limited corporate investment, but Peeters was confident Profitel would be awarded the contract because of its market dominance and existing infrastructure with the new wireless network.When the government decided otherwise, Profitels board fired Peeters along with two executives he had hired from the European company where he previously worked. Now, the board had to record out what went wrong and how to avoid this problem in the future. Questions 1. Which perspective of leadership best explains the problems experienced in this case? Analyze the case development concepts discussed in that leadership perspective. 2. What can organizations do to minimize the leadership problems discussed above?