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COLLEGE OF ENGINEERING & TECHNICAL DEPARTMENT

Manuel S. Enverga Universit F!un"ati!n


University Site, Brgy. Ibabang-Dupay Lucena City, Philippines; Telephone o. !"#$% &'"-(')'
Manuel S. Enverga University Foundation
Granted Autonomous Status
CHED CEB Res. 07!"00#
Lucena City, Philippines
1 Arnel R. Decena
Analysis of the Case: Boom and Bust in Telecommunications
. Executive Summay

There was a large demand on internet around 1000 percent a year according to
Michael ODell, chief scientist of WorldCom. Most of the telecommunication firm got
interested on inesting to this massie need. They !elieed that surging demand would soon
catch up with the capacity. "ut on the other hand, #T $T %a!s researcher named #ndrew
Odly&'o pu!lished a paper that de!un'ed the assumption that demand for internet traffic was
growing 1000 percent a year . Only 100 percent a year was concluded to !e the growth. (till
large !ut would not fill the massie flood of fi!er optic capacity. (ince most of the company
inested in this !usiness, there is oerflowing demand for the internet. This affects the sales
of the internet serice !ecause the mar'et !ecame smaller. #nd also it is reported that there is
a new technology that can increase the amount of data on a single fi!er that results in the
reduction of the need of a new fi!er optic. Most of the telecommunications company
inested in this !usiness went down and ended up with massie de!ts.
!!. Statement of the Po"lem
)n this case, "oom and "ust in Telecommunication, !ig pro!lem would hit Mr.
Michael ODell. *e is the one who forecasted the growth of the !usiness. #ccording to him
the data traffic oer the internet was dou!ling eery hundred days. This means that there will
!e a large demand on internet serice. #nd soon demand will outstrip supply for the
foreseea!le future. Most of the telecommunications firm inested in this !usiness which is
another pro!lem. "ecause after #T $ T %a!s researcher #ndrew Odly&'o made a research
on internet traffic he concluded that growth was much slower+ ony 100 percent a year.
#lthough still large, that growth rate was not nearly large enough to fill the massie flood of
COLLEGE OF ENGINEERING & TECHNICAL DEPARTMENT
Manuel S. Enverga Universit F!un"ati!n
University Site, Brgy. Ibabang-Dupay Lucena City, Philippines; Telephone o. !"#$% &'"-(')'
Manuel S. Enverga University Foundation
Granted Autonomous Status
CHED CEB Res. 07!"00#
Lucena City, Philippines
2 Arnel R. Decena
fi!er optic capacity that was entering the mar'et. Company inested here so much !ut
without earning they will end up !eing !an'rupt. #nd ) thin' this is another !ig pro!lem.
!!!. Causes of the Po"lem
There were arious things affecting the situation and results to a !igger pro!lem. )f
Michael ODell further studied the demand and supply. *e would not end up in this
situation. *ere are the causes that ) !elieed contri!uted to ma'e the situation worst,
1. Demand is not analy&ed- they should hae done the right forecasting. )f they
hae .ust ma'e a research thoroughly the forecast will !e closer to the figures that
they are e/pecting.
0. )nesting instantly into one line of !usiness, they should hae data to !ased from
!efore they inest. 1or them to 'now if the !usiness would wor' or would ta'e
some time !efore you earn from it.
These causes greatly affects the !usiness and made the situation hard for the
telecommunications firm who inested in this !usiness.
#$. %ecision Citeia and Altenative Solutions
There are theories that would help Michael ODell formulate the alternatie solutions
for the pro!lems e/isted. We hae 2ualitatie ealuation and 2uantitatie ealuation
approach. *ere are alternatie solutions for the pro!lems encountered in this case !ased on
these two types of ealuation,
1. The company can gie discount for serices or product re2uired !y the customer.
Discount can !e gien for e/ample if the customer aail a pac'age instead of
internet only they can hae landline also or )3T4. The company should create a
COLLEGE OF ENGINEERING & TECHNICAL DEPARTMENT
Manuel S. Enverga Universit F!un"ati!n
University Site, Brgy. Ibabang-Dupay Lucena City, Philippines; Telephone o. !"#$% &'"-(')'
Manuel S. Enverga University Foundation
Granted Autonomous Status
CHED CEB Res. 07!"00#
Lucena City, Philippines
3 Arnel R. Decena
matri/ or scheme on which products they would gie discounts. The pricing
should !e reasona!le !ecause competitors on this !usiness are massie. We aim
to earn more profit !ut in this case !rea'ing een is more important to surie our
!usiness.
0. They can hae additional serice for e/ample if a customer aail a product or
serices. 1or e/ample free maintenance for a year or lifetime serice. 5ood
serice always ma'es the customer want us always. Customers are attracted to
these arrangements. 1or our customer with this priilege they would not worry on
the maintenance or repair of the product they purchased.
$. &ecommended Solution, !mplementation and 'ustification
)n this case "oom and "ust in Telecommunications, the situation should !e analy&e
again and supported with researches. "ased on the last part of the analysis the
telecommunications firm inole ended up with massie de!ts. "ut ) thin' the !igger
pro!lem is the inentory !ecause the company inested that much on the materials, personnel
etc.. of this !usiness. The perfect solution for the pro!lem is to proide additional serices on
products that customer would purchase. "ut of course it must !e categories depending on the
cost, product and contract. The matri/ should !e carefully set to meet the customers
re2uirement. )mplementation of this solution will depend after the inentory has !een tallied
to ma'e it matching with the price and demand. This will not ma'e us more earning !ut )
!eliee the !usiness will surie and de!ts will !e lessened. #nother plan should !e made !ut
this time we need more research on the !usiness for the situation not to happen again.