CONFIDENTIALThisreportissolelyfortheuseofclientpersonnel.Nopartofitmaybecirculated,quoted,orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinsey&Company.ThismaterialwasusedbyMcKinsey&Companyduringanoralpresentation;itisnotacompleterecordofthediscussion.PracticeDocument,ScottBeardsley,OlivierBiebuyck,FrancisDeprez,NicolasHarvey,FrançoisLainée,MarcLestrade(alumnus),RaymonddeVréJune2000Reorganizingincumbenttelcosforfuturebattles-criteriaandmodelsOBJECTIVESANDBACKGROUND•ThisdocumentisbasedonorganizationstudiescompletedforEuropeanincumbentsfacingthequestionofhowtobestorganizeinordertofacederegulationandchangingmarketdemand•Itprovidesaframeworktogenerateorganizationoptionsaswellascriteriaagainstwhichorganizationoptionsshouldbeassessedonatelcobytelcobasis•DetailedorganizationchartsformostEuropeanincumbentsdemonstratehowtheseplayersarepositionedontheframework,andhowtheyhaverecentlydecidedtoreorganize•FrequentupdatesoftheorganizationchartsareensuredbyEurotel.DonothesitatetocontactthemtogetthelatestversionsBusinessisorganizedaroundproductgroupsBusinessisorganizedaroundfunctionsBusinessisorganizedaroundcustomergroupsOperationstoplinestructureSTRUCTURINGDIMENSIONSFORCHOICEOFANORGANIZATIONALSTRUCTUREAROUND(I)DRIVEROFTOPLINESTRUCTUREAND(II)ORGANIZATIONOFSUPPORTFUNCTIONSACROSSBUsDecentralizedtoBUsCentralizedincorporate/HQsharedservicesOrganizationofsupportfunctions*MovementofBelgacom:Supportfunctionscentralization,expendingMKI,pullingoutCIMSource:McKinseyanalysisofEuropeanTelcosSELECTIONOFANORGANIZATIONALSTRUCTURETOBEMADEBYASSESSINGORGANIZATIONOPTIONSAGAINST4GROUPSOFREQUIREMENT•Adaptedtospecificities(growthpace,competitivepressure,...)ofdifferentlinesofbusiness•Opportunitytomakefastdeals,JV's,alliances,raiseequityforacquisition•Focusmanagementonstrategicgrowthareas(mobile,data,internet,…)•Flexibilitytohandleuncertainties(regulationchanges,majorchangesincompetitivelandscape,...)•Ensureexcellentcustomerservice(leadtime,quality)•Efficientandcustomerfriendlyinterfaces•Opportunitytocreatelegitimatebundled-typeproductsasneeded•Opportunitytocontinuereducingoverheadcostsandimprovinggreyareas•EfficientdecisionmakingprocessadaptedtoeachLOB•IncreasedaccountabilityonP&L,assetsandcustomersownership•Respectofsocial/legal/fiscalconstraints•Attractivetotalent•Maximumvaluecreationfromportfolioofactivities•TransparencyforfinancialmarketsacrossthebusinessesRequirementsStrategicimperativesCustomerneedsInternaleffectivenessandefficiencyShareholdersrequirementsExamplerequirementsBusinessisorganizedaroundproductgroupsBusinessisorganizedaroundfunctionsBusinessisorganizedaroundcustomergroupsTelefonica1999Sonera1/1/2000KPNTDKBT1999DTFTBelgacom*1999BT1997Swisscom1997Telefonica1997Swisscom1999Belgacom1996MAPPINGEUROPEANTELCOS-PRODUCT/CUSTOMERFOCUSvs.WEIGHTOFCORPHEADQUARTERSSource:McKinseyanalysisofEuropeanTelcosSonera1997DecentralizedtoBUsCentralizedincorporate/HQsharedservicesOrganizationofsupportfunctionsOperationstoplinestructureDETAILEDORGANIZATIONCHARTS•Belgacom•BT-BritishTelecom•FranceTelecom•DeutscheTelecom•KPN•Sonera•TeleDenmark•Telefonica•Telia/Telenor•Swisscom•SBCBELGACOMCURRENTORGANIZATIONCHART**LeavingoutthefollowingsubsidiariesofBelgacomS.A:Belgacomservices,FinbelRe,EspadonTelecom,BelgacomSecurityholding**Inchargeofsubsidiaries...
