The company One Tel Limited was founded in the year 1995 and was restricted from trading in 2001. During this period, the organization has achieved many positions in the Australian telecommunication industries which have helped it to earn a reputable position in the market. The company gained a lot of media influence at the time of the liquidation in which most of them stated that the collapse of One Tel Limited was majorly caused because of the IT system failure. (Boyd, 2013)The use of IT system for a large scale telecommunication company should have a high degree of professionalism and long-term planning to meet the rapid growth that has been observed by the organization.
The company One Tel limited was established in the year 1995 in Sydney. The two major businessmen Jodee Rich and Bradley Keeling were the founders of this company and verbal accustomed to the fast-growing Technology based industries because of their previous experiences. In the early years, it was clear that the company was growing at a substantial rate and was accomplishing great tasks and objectives in a short time (Cochran, 2017). Also, this substantial growth rate made it necessary for the company to provide returns to the shareholders with the profit that have been retained by them. Based on the research that has been made for the final 18 months, it was noticed that the company only achieved huge losses on a grand scale while trading. On 17th may, 2001 a crisis board meeting was held in which Jodee Rich addressed the board and the major shareholders about the insolvency that is being faced by the organization (Dash, 2016). The history of this company clearly states that the firm was expanding at an extremely fast rate and also that the chief executive officers of the organization were not having proper information about the financial state of the company as the growth was substantially exceeding the income revenue.
The company One Tel Limited have achieved a lot of successful obligations at the time when it practiced business. It was also stated to be the second largest telecommunication company in Australia. The company was also able to attract many customers towards their telephone carriers. It has been mentioned in many articles that the customers of One Tel Limited were mainly single mothers, pensioners, and teenagers. Between the years 1995 and 1996, the customer base of the company reach from zero to 100,000. (Dayananda, Irons, Harrison, Herbohn, & Rowland, 2008)The organization also had a very huge internet service providing capacity and was once the largest ISP provider in Australia with more than 150,000 active customers. The company has also tried to provide mobile call services which have helped them to gain over 250,000 mobile users with the help of appropriate marketing skills that they have directed towards the consumers. (Fridson & Alvarez, 2012)The company also dealt in the fixed wire services which have improvised the demand for a long distance and overseas telephone calls. The next generation of mobile phones services was also transmitted by the company to the customers. The company was also a very powerful marketing and brand builder as it attracted the youth towards it and often had substantial disposable income.
It was in the middle of 1999 that the influential media companies took huge shareholdings in the business of One Tel Limited. The registry of the shares was having a very different profile and the organization was also able to expand its origins to a whole new level. A total of $900 million was invested by the News and PBL for the business of One Tel Limited during the year 1999 (Ittelson, 2009). Also, the companies had appointed very high profile non-executive directors to the board of the organization in order to represent themselves. The management of the company was smart enough to deliver worldwide content to the public using the electronic services. These companies have not only invested a huge sum of money but also they have motivated the One Tel limited to expand worldwide and deliver advanced mobile services at a global level. The organization has faced many problems in order to establish mobile network infrastructure within the country. This led to a strategic partnership that was established with the American Communications vendor named as Lucent Technologies under the agreement that the Lucent will help in building the mobile infrastructure. (Johnstone, 2014)The ultimate cost of this whole operation was approximately $1.2 billion and the payout was said to be paid in the instalments from the revenue that will be generated with the help of the mobile network. (Kusano, 2018)
It is the sole duty of the directors and the board of the company in order to be responsible for the management of the business. Management not only means to look after the day-to-day business of the company but also to implement a long-term strategy which will help the company to achieve objectives and earn the interest of its shareholders (Loughran, 2010). There are major corporate governance principles that should be kept in mind at the time of Management of a business:
All these duties were not fulfilled by the management of the One Tel Limited which was very inefficient in nature. The breach in the contracts and the inefficient management of the billing system was one of the major reasons for the collapse of One Tel Limited. The management was inefficient in the task of making decisions and executing the tasks which have made it vulnerable for the organization to work in such an environment. (Ramírez, 2018)
There were many financial statements like the debtors aging report, trial balance and many other accounting reports that was neglected by the management while analyzing the structure of business which may have led to the collapse of One Tel Limited. No attention was given to these cases which caused the whole Company to deal with a major threat of liquidation. The value of aggression and faith is very necessary for an organization in order to survive in the market of the telecommunication industry which was observed to be absent in the case of One Tel Limited (Robert Parrino, 2013). Two major decisions were taken by the organization towards it foundations policy which was that no accountant is allowed to go against the company’s intangible assets and the deferred expenditure policy of the organization was also changed in every two years. There was manipulation observed in every part of the management structure and also the illegal methods were used by the organization to represent fake report with the help of auditors. The small situations added up and became a very huge point or fact which resulted in the liquidation of the company. The company’s downfall was greatly caused because of the low moral code that existed in the management structure which clearly shows that inadequate corporate governance and management will only lead to insolvency. (Seitz & Ellison, 2009)
The failure of its strategy that has been used by the company has also been a major reason for the insolvency experienced by it. The billing system that was developed by the company was also not appropriately designed. There was a lack of checks and balances in this system which has led to the lack of prioritization and forward planning in the management structure of the organization. The introduction of GST in July 2000 increased a lot of problems in the billing strategy that was used by the organization to operate (Siciliano, 2015). The cycle of the billing system exceeded more than 3 days because of which the bills were produced inevitably late. After the application of GST, it was observed that more than 6 to 7 days were required in order to complete the billing cycle. While the management was trying to rectify this problem, to more complications of data replication and three months backlog with the schedule was made known to the organization. (Strathern, 2010)
The problem of the bills became intolerable for the customers and the partners which needed them to decline the payment. The correspondence, process, interaction and the expectation failure was observed by the management other organisation. The inability of the billing system to meet the business and regulatory requirements led to the fall of One Tel Limited. The organization was to be offered a sum of money amounting to $132 million for rescue by its investors. Later it was observed that the investors also no longer wish to be associated with the organization because of the tarnish reputation of One Tel Limited.
Several impacts were noticed on the telecommunication industry during the year 2001 because of the collapse of one of the leading companies in the industry. New companies in the telecommunication industry took place of One Tel Limited as soon as it left the market. Because of the vigorous improvement and demand of the telecommunication devices, the public didn’t notice the absence of One Tel Limited. The management structure and the board of the company were only responsible for its liquidation. (Taillard, 2013) The partners of the organization also lost faith because of the unfair and manipulative techniques used by it in order to become the market leader. Overall, it has been observed that the practice of safeguarding the company has led them to the downfall but the major reason was the ineffective management structure which improved their difficulties.
Conclusion
After the above analysis, it can be clearly stated that if a company or an organization does not work in compliance with the corporate governance practices, then the chances of its failure increases. The absence of the risk management strategies in the management structure of a company makes it really tough to withstand the changes in the environment. The absence of disciplined board and management structure restricted the organization from taking corrective actions at the earliest. In the case of One Tel Limited, the major reason for the downfall was the ineffective management structure and corporate governance strategies that have been used by the organization. Also, the use of demoralized and false methods should be avoided in order to gain the respect and fate of the shareholders and customers. Therefore, it is very important for the management structure of an organization to be updated about the legislative and the regulatory matters. The changes in the environment and also the business performance of an organization should be looked after in an organized and planned way so that effective decision making can be achieved.
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