Cash Connection: Are Its Payday Lender Strategy and Its Business Model Ethical

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  • Topic: Cash flow, Discounted cash flow, Telstra
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  • Published : November 18, 2012
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SOLUTIONS TO CASE STUDIES CHAPTER 13

Case Study 13.1 Telstra opts for David Thodey as replacement for Sol Trujillo

1. Why would the Telstra board appoint an internal candidate to the position of chief executive, rather than an external candidate?

This question is a good opportunity for students to reflect on what constitutes ‘expertise’. On the surface of the facts, David Thodey may seem like an unusual choice given that his proposed management changes are unknown. However, when the facts are considered in more detail, his selection might be more understandable given that he is likely to move quickly to end the acrimonious relationship that has developed between the company and the government. The article notes that Mr Thodey does not have a close relationship with key government ministers and has the political advantage of not being associated with his predecessors aggressive strategy against government.

Why might David Thodey have been preferred to other internal candidates one of whom had finance experience and the second of whom had other telco industry experience?

As implied in the answer to question 1, having no association with government minister would be a decided advantage when it came to negotiating the proposed $43 billion national broadband network. Mr Thodey would bring a ‘fresh’ perspective to the situation at Telstra and would not be burdened by an association with its past history. An internal appointment might also be a source of inspiration to Telstra employees if he was to offer hope of a successful financial turnaround.

The article reports that David Thodey had internal experience. How might his skills set have changed during his time with Telstra and what might have been his main means of learning new skills?

Early in his career, Mr Tilton’s skills would likely have been relatively narrow. However, as he rose through the ranks, higher positions would have brought...
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