TELETECH CORPORATION,2005

BY TEAM ENTRE - SPARTA

INTRODUCTION
Two main business Telecommunications services and product & systems segment ROC in 2004 9.10% and 11% Value of net assets $11.4billion and $4.6 billion Market value 75% and 25% Overall ROC 9.58%,hurdle rate 9.3%

Mission statement - We will create value by pursuing business activities that earn premium rates of return. Measure of value creation 1) Economic profit of each business unit. Economic profit = (ROC-hurdle rate)*capital employed 2) Assessment of capital investment proposals

Arguments for risk Adjusted hurdle rates

FOR The differing nature of two business and risks Cost of raising capital is different Assessing profitability of segments AGAINST Investors understanding Depriving under profitable division of investment in order to channel funds into profitable division. Corporation raises capital based on overall record.

Questions
What were the appropriate hurdle rates for the segments? Was the products and systems segment underperforming? How should Teletech respond to the raider?

CONCLUSION

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