In early 1998, the top managers at AB Telecom were debating how to change its worldwide organization. AB Telecom is a Canadian telecommunications hardware firm that manufactures fixed wireless systems. This $200 million company earned more than 95 percent of its revenues from outside Canada, with 40 percent coming from Asia in 1997. In 1998, AB Telecom conducted all of its manufacturing and R&D within Canada; much of its market development and project engineering is maintained in its Canadian headquarters.
AB Telecom was founded in 1981 and is publicly traded on several Canadian stock exchanges. It had been profitable since 1990, with an average 7 percent net profitability between 1990 and 1997. Given its strong presence outside Canada, ABT has been awarded the prestigious Canadian Export Award several times by the Canadian government.
AB Telecom's traditional customer is a national telephone company that wants to improve telecommunications to its rural locations. Sixty percent of ABI's sales in 1997 were turnkey projects for national telephone companies. Its structure had been a regional sales and marketing structure with three regions; Asia/Pacific, Latin America, and Europe/ Middle East/Africa. Each region had a headquarters and several sales subsidiaries in different countries. These regional offices had autonomy in booking small deals, but headquarter became involved with deals worth over $2 million. The regional offices are also reliant on sonic project engineering support provided by the headquarters.
Several significant changes had created a need for top management to review its current structure;
• early signs of economic difficulty in Malaysia and other southeast Asian countries could
tentially stall or stop agreed-to projects in this region
• opportunities to use their existing fixed wireless systems for industrial application were
growing
• Europe, Middle East, and Africa provided many opportunities for sales to traditional national
telephone companies for rural applications
• potential is unknown for its new wireless prod -uc for urban data transmissions to telephone
companies and new competitors
In March 1998, the CEO, his top management team, and some board members met to discuss how to restructure the company.
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