TEOCO case study

Submitted by
Edwin Nash
MGT 527

Introduction:

In 1994 the company TEOCO was founded by Atul Jain as an S corporation. He is the CEO of
the firm who was focused and intelligent with a good educational background. TEOCO was a
company specialized in the design of software for analytical solutions and consultancy services
suitable to satisfy the needs of the telecom industries in the area of revenue and routing
optimization and cost management. The case analyses the corporate culture that is being instilled
in the heart of the employees since it was an employee owned company to achieve the firms
goals and objectives. The CEO Atul was committed in establishing a company that would be
solely devoted to organizational culture and ethics of business. In the developing stage of the
firm, it was focused on providing high quality consultancy services for projects in IT with clients
like Siemens, Mobil, Cable & Wireless, Mac, SRA, Freddie and TRW. At this time the
companys name was known as Strategic Technology Group (STG) and was changed to TEOCO
in 1998.
TEOCO basically used its software application by acquiring an auditing expert so as to achieve
market penetration and leadership in the industry. The firm was limited in branches and wanted
to expand its locations. So with collective decision making strategy and continuous innovation of
product development it expanded. Atul made sure his employees were a part of the firms
objectives at different levels of management. He believed that having an employee ownership
environment will have better performance and strong commitment. The firm then in 2006 and
2008 acquired companies like vibrant solutions and Vero systems to increase its employee
strength. The firm then invested huge sums in companies like Eventrix, netgenShopper.com and
AppreciateYou.com. But in 2000, TEOCO suffered financial losses from their investments. The
firm was suffering and they were facing a tough financial situation. Then Atul decided to make
decisions on focusing and restructuring the R&D department to come up with new and

innovative products. The firm then came up with Xtrak technology that helped as a solution for
the companies invoice automation. Atul then chose a rational strategy to help provide a feedback
that is tangible for development and data storage. In the end their services helped the firm to
grow and increase their revenue.
Current problems/issues/situations:
Some of the problems the firm faced from merging were the competitive pressure so as to
increase the number of clients and make a large enterprise with a low transaction rate. Their
system was built to serve the purpose of transaction dealings up to a billion. When the customer
transactions volume had increased, it led to time and report problems so this in turn made the
holds in report to constantly downgrade even though transaction time was adequate. The CEO
Atul had issues of taking decisions on long term basis which could have a positive impact on the
firm. After acquiring TTI they faced challenges in the form of size, culture expansion and the
location. In the process they also acquired employees since TTI had an employee rate above 300.
So handling a large number of employees would be capital intensive as it has to concentrate on
the needs of the employees keeping in mind that TEOCO values their belief that employees are
also owners of the business. Since TTI was based in India it gave TEOCO a competitive
advantage to capture international markets and their main focus was USA. It gave them an
opportunity to cross sell products and create marketing synergy. (Schiller, F., &Prpich, G. 2014)
Another problem they faced was expansion. A lot of capital is needed to invest when expanding
and keeping in mind the fact that TEOCO was having financial problems but the acquisition
made it simple for them to expand and get to markets they never thought off. TEOCO and TTI
have different cultures and management and TEOCO strongly believes in their employee culture

and they werent ready to exchange cultures for a new one since it was TEOCOs strength. The
employees of TEOCO were motivated and rewarded with incentives that were a part of the firms
financial organizational policies. Atul then realized that the return of risk had changed in time
over the years and wanted to provide a provision of security for their employees so as to help
them achieve their goals. Atul believed that his philosophy of business should be that all owners
or entrepreneurs should avoid debt and take decisions that will favor the firm and he valued his
firm so much that he never wanted to trade or sell it for anything. On a whole TEOCO mainly
faced problems in acquiring a new firm since it was facing a financial situation and needed the
capital to invest and make their business grow successfully. (Christensen, M. 2014).
Alternatives for each issue:
Alternatives for the issues can be to use a data warehouse application and evaluating it based on
the performance. Since the customer base was large, this could help in improving performance
100 times faster. Another alternative would be to offer a cost effective and flexible solution.
Advantage: the advantage would be that since the transaction rate was high the queries would be
responded quickly and increases the business transactions.
Disadvantage: the data warehousing application can be costly to maintain and acquire because it
undergoes high work rate.
The next alternative to the issue of size would be for TEOCOs management to layoff or
downsize some of its workers and from that money they can invest for expansion. But this can
impact the firm as it may lose some of its skilled workers. If TEOCO acquires another company
then they carry the responsibilities of the acquired firm and TEOCO can reduce the employees
responsibilities.

Advantage: the advantage would be that since cost cutting would be done it will help the firm to
invest its excess funds in areas of expansion internationally.
Disadvantages: the disadvantage would be that downsizing its workers can result in losing its
skilful workers.
Another alternative to the problem of TEOCO acquiring other firms is that they should learn to
encourage and embrace cultures of other firms. TEOCO wasnt in a stage to be adaptable in their
rules and core values. Its always important for firms to learn the culture of the acquired firm and
see if there is a commonality and if not they can make adjustments and mend the rules
accordingly for the better working of the firm. (Bosworth, Jones & Wilson, 2008).
Advantage: the advantage would be that when one embraces new culture it helps to follow the
guidelines better.
Disadvantage: the disadvantage would be that there can be a clash of rules and regulations since
they are two separate entities being joined into one.

Justification:
Thus to justify the above issues and its alternatives we can say that TEOCO was having supreme
power in the form of handling its employees and its operations. Their acquisition would help
them attain leverage by the means of capital to invest in expansion. Also the CEO Atul had a
rough start and with his vision, mission and goals he anticipated the future in becoming the
biggest telecommunications software industry (Brueller,Carmeli&Drori, 2014).
Conclusion
Thus to conclude we can say that the business industry is very dynamic and complex and
lot of competition follows. So an efficient CEO has to take strategic decisions as a solution to

save the company from its troubles. In an industry like software that is very challenging and
risky, the top management has to meet the demands of its client quickly. If they cannot then they
would not be able to achieve the desired level of income needed for their business. The firms
rules and regulations after acquisition have to be revised in favor of its employees. The firm
should focus on being debt free and raise funds for expansion by selling its shares in stock
market.

References
Bosworth, D., Jones, P., & Wilson, R. (2008).The Transition to a Highly Qualified
Workforce. Education Economics, 16(2), 127-147

Brueller, N. N., Carmeli, A., &Drori, I. (2014). How Do Different Types of Mergers and
Acquisitions Facilitate Strategic Agility?.California Management Review, 56(3), 39-57.
doi:10.1525/cmr.2014.56.3.39
Christensen, M. (2014).Communication as a Strategic Tool in Change Processes. Journal Of
Business Communication, 51(4), 359-385. doi:10.1177/2329488414525442
Jones-Rikkers, C. G. (2012). Supervising The Transition To A Leased Workforce. Insights To A
Changing World Journal, (1), 167-177
MetricStream Adds Two Modules to Quality Software. (2006). Quality Progress, 39(1), 87
Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson, (2015). Strategic Management:
Competitiveness and Globalization Concepts. Cengage Learning Eleventh Edition
Schiller, F., &Prpich, G. (2014). Learning to Organise risk management in Organizations: what
future for enterprise risk management?. Journal Of Risk Research, 17(8), 999-1017.
doi:10.1080/13669877.2013.841725
Starks, A. (2013). The Forthcoming Generational Workforce Transition and Rethinking
Organizational Knowledge Transfer. Journal Of Intergenerational Relationships, 11(3),
223-237. doi:10.1080/15350770.2013.810494

Appendix A
Strengths:

Increase in revenue and profits

Skilled and motivated workforce

Low labor costs

Corporate culture is unique
Steady flow of cash and stable financial support
Research and development department is effective in creating new and innovative
products.

Weaknesses:

Fear of the unknown

Stiff competition in the market
Selective interview process for new hires
Its unique corporate culture can affect the longevity of the business

Opportunities:

Acquisitions and mergers can help them expand globally with their products
Creating new and innovative products and services
Acquiring of TTI had given them access to existing ideas and products

Threats:

Interest rates can be high

Increase in competition locally and also when expanding into global markets

1. Describe environmental conditions that influenced Atuls decision to entertain TA

Associates unsolicited investment proposal. How will the partnership change
TEOCOs business?
The environmental condition that influenced Atuls decision to entertain TA associates
unsolicited investment proposal was that it was an offer he couldnt resist as TEOCO
needed financial capital to invest and expand globally. So TA associates were like a
support for them since TA associates were financially capable. The TA associates
environmental conditions were favorable for Atul as he was the CEO and had full control
in taking decisions. Before going ahead with the offer he consulted with his employees by

getting feedback from them in an open forum. Knowing that he had highly skilled
workers and financial support of another firm he went ahead as it would benefit both the
parties involved. The partnership with TA associates would build a strong bond between
the two firms that will strengthen the business locally and globally. It will also impact
their internal environment workforce as the number of employees will increase and a lot
of funds would be needed to meet their needs. Also a clash of organizational cultures will
happen when expanding into international markets.

2. What are the expectations of both parties? How can the companies ensure that
these expectations will be met?
The expectations of both parties are that they expect their business will yield good
returns and high profits. TEOCO expects that there will be partial liquidity for its
shareholders. They also expect to have new and innovative products to offer and
increase their client base. The firms can ensure that these expectations will be met by
making their core competencies strong. This can be done by a steady and stable flow
of cash. Once they expand into international markets they can maintain their software
products by innovation. They can enter the 4G next generation platform to compete in
international markets. They can also ensure that the HR department is efficient in its
performance by their employees so as to help the firm achieve its goals.
3. Discuss TEOCOs strategy. What challenges does the TTI acquisition pose for the
company?
TEOCOs strategy was to get enough funds to invest and expand into the global
market. The acquisition strategy helped them to expand their product line and
increase their customer base. TEOCO offers different product lines that are tailor

made to suit the needs of the clients like network optimization, margin and service
assurance. It also offers financial performance consolidation and customer quality
experience.
The challenges the TTI acquisition pose for TEOCO were in areas of culture, size,
location and expansion. The challenge of competing in international markets would
be a problem due to large number of competitors. Another challenge they could face
would be the integration of cultures in relation to global expansion based on the local
cultures of different countries.

4. What suggestions do you make for Atul as he adjusts to anticipated organizational

changes and executes revisions to his strategy? What steps can or should be made
in light of the companys new circumstances?
I would suggest Atul to stick to his own decision making, keeping in mind his
employees. It will help him give a competitive advantage and an edge over its
competitors. His vision, mission and goals are established for the kind of firm he
wants, so all he needs to do his develop a strategy with his employees to gain good
returns.
The firm can take steps or measures to maintain its core values like human resources
and shared leadership and implement them in its operations and their policies. This
will in turn help them make a better firm.
.