FINAL SYKES DISCUSSION AND FLOW POV: Consultant Problem: How can company address the needs of its

stakeholders? Analysis: Who are stakeholders and their needs? Customers - low cost, quality service, bundling Shareholders - increase in EPS & share price Employers - compensation, security, satisfaction Suppliers - continuous business Local government - employment & remuneration of benefits granted Creditors - meet obligations How the company can address the needs? Customers - relocation to lower cost countries, investment in advanced technology, diversify offerings, negotiate contract with suppliers, highly trained agent Shareholders - increase customer base, lower costs, diversify offering, expansion to global market Employees - good compensation packages, contract of employment, opportunity to be promoted Suppliers - agreement/partnership Local Government - stay operating in the community, conduct CSR program, remuneration of benefits agreed Creditors - ??? Stakeholder Framework (TEY, pakisama si creditors sa table dahil hindi natin nasama kanina :)) whats your verdict? or should i decide on my own na lang?

SYKES ENTERPRISES I. Case Background

Shifting to lower-wage and generally lower cost countries, laying off staff and consecutively closing down operations in many US locations in order to compete in an aggressive industry makes up the current scenario tackled by Sykes Enterprises. In addition to these is the unfavorable result in terms of financial performance which reflects declining revenues and profits plus an all time low stock price. Moreover, competition with key industry players continues to add pressure to the company to keep up, maintain, and capture a larger portion of the global market. Currently, Sykes is faced with tough demands from various sides of its environment particularly from its stakeholders. II. Problem Statement How should Sykes Enterprises address the needs of its various stakeholders? III. Analysis Who are Sykes Major Stakeholders and what are their needs? Customers Fulfilling the needs of the customers coupled with appropriate pricing strategies is one of the goals any company should achieve in able to be profitable. Although almost all customers consider low costs as the biggest factor in accepting a service, in this particular industry, outsourcing costs should really be relatively cheaper than doing the clients activities in-house. The clients would also want the services bundled wherein they can entrust all their non-revenue producing but as equally important activities in one company. This is couple with the requirement the service being offered is of high quality. These factors guarantee long-term relationships with clients. Shareholders Shareholders in simple terms are the owners of Sykes Enterprises. They expect business to be highly profitable and in return produce good returns for their investment. Specifically, these can be summarized into high earnings per share (EPS) and share prices. Sykes shareholders would want to have continued increase in EPS especially having suffered losses from years 2000 to 2002. Shareholders have also experienced a low average in market prices for the past three years. Employees The Customer Management System industry is both capital and labor extensive. Employees all over the globe are providing excellent service to Sykes customers for 24 hours and 7 days a week. Clearly, employees are adding value to the company through customer relations and in return should be compensated appropriately. According to Maslows Hierarchy of Needs, financial remuneration, job security and career fulfillment are just some of employees needs that companies should cater to. Suppliers The sustainable success of BPOs greatly depend on technology.With rapid change in technology, suppliers of BPOs have low to medium bargaining power. Thus, their assurance of continuous business with your company is deemed important. Vendors such as SAP, IBM, EDS, and Accenture have specifically created BPO programs to cater to the markets needs. Local Government Currently, Sykes is only present in five states. However, in the beginning of 2004, you have an additional nine centers in other states but decided to close them down during the year. Local economies were

hurt with surprise announcements and abrupt retrenchment. Town managements would of course want to have high guaranteed employment or remuneration of benefits given in case of companys fall out in that location. Creditors Like the shareholders, creditors also need to make sure that Sykes Enterprises is financially stable to meet the currently maturing debt and to make sure that their debts and covenants are being prioritized. How can Sykes Enterprises address stakeholder needs? Customers By relocating the call centers to low cost countries, lower taxes, wages and less government restrictions can be achieved. In spite the low costs, it is good to note that your company relocates to areas that not only offer relatively lower costs but also have fluent, educated, customer-centered, and highly trained employees. Furthermore, negotiating contracts with suppliers can also minimize costs. This industry calls forth heavy investment in advanced technology such as Cloud Technologies and Software as a Service (SaaS) capabilities, increased efficiency and lower lag times is essential to support high demands of clients. Competing well with your competitors mean that your company should be able to diversify offerings from customer relations to vendor management and warehousing. Shareholders By using the low-cost strategies to address the needs of customers, you are already improving the bottom line of your company. At the moment, Sykes has several opportunities to increase profitability by generating more revenues. Using Ansoff Matrix, Sykes can develop service offerings through providing other auxiliary functional support to their clients such as Human Resource Management, Firm Infrastructure and Procurement. With this strategy, there would be continuous flow of earnings as Sykes will be able to provide more services to its existing clients. Another way is through developing business segments. According to a 2004 US National Benchmarking Report, a great deal of centers is catering to the financial services industry. Your company is on the right track with high service of 36% in technology and 32% in telecommunications. Revenue would further boost through growth in the financial service market. Also, it was reported that 60% of centers cater to the national market while only 5% serve the international market. This serves as opportunity for Sykes to expand in the global market and capture international clients. This would result in a raise in revenues, consequently the bottom line as well, and reflected in an increase in share price. Employees In order to answer employees needs, your company should be able to provide good compensation packages and employment contract. This will help entice employees as well as encourage them to stay with the company. High turnover is common in this industry and if your company can manage to reduce it by little, costs reductions will improve. Also, employees should also be given chance of being promoted according to their tenure and performance. Suppliers The software being used, the applications and platforms, the hardware and other related technology have a large impact on the overall BPO service affecting quality, costs, and risks of operations. Hence, it is important to keep satisfying the suppliers. One way to do this is by signing a contract, guaranteeing them an exclusive partnership with you given a specified term. Moreover, by offering them your services at lower prices to suppliers can also strengthen the supplier-vendor relationship.

Local Government Communities would best be satisfied if Sykes will decide to stay operation in your chosen locations. Local officials would put first the towns interest, and this can be managed if the towns population is securely employed and rightfully compensated. Also, officials have provided best effort to provide incentives for your company and thus have high expectation of you continuing business in their location. Past performance might indicate that Sykes will need to relocate. Thus people would anticipate at a minimum, return of benefits granted. Sykes could conduct CSR programs that will improve the community and build a good image for the company. Creditors Assurance that current cash flows and cash flows from future operations will be adequate to meet future debt repayment requirements as stated in your companys 2003 financial statements should be supported with concrete evidences such as rising revenues and liquidity. Stakeholder Analysis: Salience Model To determine which among the alternative courses of action that address the needs of your stakeholders would be best for Sykes to pursue, the framework by Mitchell, Agle, et al (1997) called Salience Model would be adopted. The stakeholders will be evaluated based on the following parameters: Power to influence- the capacity of each stakeholder to affect the decisions that would be taken by the company. Legitimacy of relationships- authority of each stakeholders and how the company is held accountable to them Urgency of need- time frame in which the stakeholders expect their needs to be addressed by the company. In adapting the said model, ratings of 1-5 are given for each shareholder with respect to the parameters with 5 being the highest. . For example, a rating of 1 in the category power to influence would mean that the stakeholder does not have any impact on the decisions that will be made by the management of Sykes. Then the ratings is averaged to determine which among the stakeholders really have the biggest impact to the company and whose needs should be prioritized in determining the actions of the company in the future. The table and chart below shows the summary of the ratings given to each shareholder corresponding to the three parameters of the Salience Model. Based on the chart above, the needs of the stockholders have the highest priority, followed by the customers, then the creditors, employees, suppliers and the local government as the last. The shareholders got a rating of 5 for all the areas in the framework. The power of the shareholders is considered very high due to their voting powers with regards to major decisions in the company. The members of the Board of Directors are elected by the shareholders and they have the say in the strategic decisions of the company. The legitimacy of relationship between the shareholder and the company is also high. The needs of the shareholders from the company is continually addressed and usually top priority for a company. The second stakeholder in our analysis is the customers. The lifeline of the company comes from their clients. In the industry in which Sykes operates, companies usually cater to only a few clients and these clients account for

a big percentage in the revenues of the company. Hence, it would only be natural that customers would also have a high rating in its power to influence. The customers form part of the daily operations of the company the their needs must be addresses for the company to stay in business. The legitimacy of the relationships, on the other hand, is not high because clients have the option to switch to another company easily. Creditors are the next stakeholders whose needs have to be addressed. Unlike the first 2 stakeholders discussed, the power to influence of the creditors is not as high. This is because they do not form part of the operations of the company. However, a rating of 3 is given because, somehow, the management still considers having enough cash or assets to pay off their creditors should their debts become due. Indirectly, there is still influence. Similarly, the urgency of need is rated as 3 because meeting the obligations would depend only when they become due. Most debts, especially those that arose when the companies make major decisions like restructuring, are noncurrent. The legitimacy of relationships are rated very high because transactions with a creditor are usually governed by contracts. The employees come after the creditors. It should be noted that the employees discussed here are those that are hired to service the clients. They do not include the management who decides on the major decisions for the company. Therefore, the power to influence is only at a rating of 2. The legitimacy of relationships is high because there is direct employer-employee relationship between them. This may also be covered by contracts. Urgency of need is rated as medium since companies may decide freely when to give increases in the compensation pay, and when to promote the employees, but they still have to remember that if they wait too long in giving these incentives, the employees may resign. Suppliers are the next stakeholders. Their power to influence your company is effected though the prices that they set for you so this is rated as 3. Legitimacy of relationships are also rated as 3 because there is a chance of switching among suppliers. However, the urgency is rated a bit lower because a continuous business with a supplier is dependent only on the agreements between the price and other economic conditions. The last stakeholder is the local government. The government influences your company with the different regulations that they set for the industry. These may include the requirements for business permits and tax. This is only given a rating of 3 because they are not affecting the daily operations of the company. The legitimacy of relationship and urgency of need is also rated very low as the local government do not directly affect the business of your company. IV. Recommendations >prioritize the needs of shareholders and customers, relate to ranking and class discussion on ethics >discuss what actions the company will take >in relation to shareholders (branding): LG redemption hmmm... change management and other stakeholders? V. Implementation Plan SHORT TERM: SHAREHOLDER AND CUSTOMER FOCUS Given the stakeholder analysis and recommended strategies, Sykes should address its stakeholders needs in order of priority. Upon seeing the weight that each group of stakeholder puts on your company, the shareholders

and the customers should be on top of the list. In addressing their needs, profitability should be improved in such a way that more clients would be brought in while the companys stock price is driven up. Continue Relocation During the first phases of implementation, the focus would be pinned on satisfying the shareholders and the customers. This shall be carried out by pursuing the current move of Sykes that is relocating to lower-cost locations to achieve significant cut both in capital and operating costs. This will ultimately lead to higher reported profits, therefore satisfying shareholders preference. On the other hand, this step would also lead to satisfying customer needs as Sykes can be more able to offer quality services at lower cost to clients as compared with the competition. Expand and Diversify Operations With rapid technological changes and evolving customer needs, the industry is growing at a very fast rate. In order to keep up and benefit from this trend, the company should take on a growth strategy by means of horizontal diversification through acquisitions of related enterprises and additions to its existing portfolio of products and services being offered. The leading competitors have already adopted the acquisition scheme which made them larger both in operations and profits. This justifies the need of Sykes to do the same to be able to share in the growth of the industry or it will just lag behind if it would not. Furthermore, competing in technology-based businesses entails the need to advance its technological capabilities to innovate and put together products which clients are most likely to avail, so it is very important to widen its products and services offerings. LONG TERM: OVERALL STAKEHOLDER WELFARE After carrying out the short term execution plan, your company will be ready to move to the next phase of implementation which will answer for all the other stakeholders needs from the creditors, employees, and suppliers down to the local governments that Sykes deals with as it has already satisfied its primary responsibilities. Meet Obligations in a Timely Manner Creditors interest in the company is limited to the resources they lend but the creditors are actually the ones who fuel up the operations because of the resources being made available to Sykes. Therefore, it is necessary to gain their confidence in your company by being able to pay maturing debts on time. Adequate cash from operations should be set aside to meet obligations without delay. Provide Satisfactory Compensation Packages and Equitable Employment Opportunities High employee turnover is undoubtedly prevalent in the industry but with the employees mainly providing for Sykes continuity in the call center industry, their welfare cannot be set aside for too long. It will be to the best interest of both the company and the employees if compensation packages will be able to benefit the employees not just for day-to-day living but also in a forward-looking manner which will enable them to lead a decent and satisfied life. Equitable employment where their jobs will be secured without fear of being laid-off before their contracts terminate will further attract the most capable and motivated individuals to your company. Achieve Synergy with Suppliers Aside from establishing long-term affiliations with suppliers, Sykes can better take advantage of the capabilities of the suppliers by partnering with them in ventures that would support the companys strategy of offering new and diverse services to its clients where development can be effectively fast-tracked.

Reduce Frequent Relocation and Conduct CSR Programs In order to instill rapport and gain support from the community you are operating in, it is very important to listen to the demands of the local governments and improve relationships with them. This can be done through reducing relocations to an acceptable amount which can only be achieved through effective research and forecast of the factors that might affect the companys operations in a locality so that there would only be hardly any relocation to occur in a short span of time. CSR programs will also be of great help in indirectly telling the community that Sykes actually sees its needs and is willing to take part as much as a responsible resident would do. VI. Evaluation Measures During the phase of implementing the recommended strategies, keeping track of the progress and overall effectiveness of the plan is a requisite to ensure success in attaining the strategic goals. The following table shows the objectives and relevant performance metrics in evaluating the essential areas involved in the companys operations. Sykes Enterprises Balanced Scorecard <please see email attachment>