Nortel Article Analysis

Topics: Corporate governance, Chief executive officer, Executive officer Pages: 2 (545 words) Published: June 26, 2007
At the annual shareholder meeting in Ottawa, current chief executive officer of Nortel Networks Corp., Mr.Zafirovski told shareholders that the company is finally making a come back. Although the company has been faced with significant layoffs, lawsuits, rapid executive turnover, a struggling share price and poor sales; the CEO believes that this is all in the past and that Nortel "will be a great company again". The company is facing fierce competition from new low-cost competitors in the Asian market, which has made its journey to recovery all the more difficult. Despite this Mr. Zafirovski is enthusiastic and optimistic that Nortel will become a leader in the telecommunication industry. According to the article however, shareholders remain skeptical about this rosy forecast. This comes as no surprise given the company's shady past of loses and questionable corporate governance practices (Tuck, B9).

The CEO mentioned that "Nortel Networks Corp. is poised to be a leader in a massive market that will define a new era in communications". This vision appears vague, broad and fails to convey to shareholders, analysts or investors how exactly management intends to reach its goal. Like employees, unless management communicates to shareholders the reason for its strategic course and how it plans to reach its vision, it will be hard for shareholders to buy into the strategic vision of the organization (Thompson, Gamble, Strickland (2006), 18). It comes as on surprise then, why shareholders are doubtful about what Mr. Zafirovski had to say. The article emphasizes that Nortel must take into consideration what is happening in the external environment, especially with regards to its competitors, so that it can develop a sound strategy and ultimately reach its goal of being a leader in the telecommunication industry (Thompson et al. (2006), 9). Additionally, the article reinforces how unethical strategies and behaviour displayed by Nortel in the past can have serious...
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