Prestige Telephone Company
Title: PRESTIGE TELEPHONE COMPANY: A CASE ANALYSIS
Point of View: Management Consultant
I. Issues and Concerns:
■ In 1999, the Public Service Commission encouraged all public utilities to: 1. seek new sources of revenues and profits since heading towards deregulation; and 2. To reduce the need for rate increases.
■ Prestige Telephone Co. realized that a centralized service that could plan, control, and account for its own operations could benefit themselves and other businesses in the region.
■ Utilize the current telephone circuits and sell extra computer time not needed by the telephone company.
■ Prestige Data Services performed data processing for the telephone company and sold computer services to other companies and organizations.
■ Daniel Rowe, President of Prestige Telephone believed that a profitable subsidiary would reduce pressure for telephone rate increases.
■ Susan Bradley, Manager of Prestige Data Services believed that given more time, the subsidiary is yet to experience profit, but Daniel Rowe felt action was necessary to reduce the drain in company resources.
II. Statement of the Problem:
1. The summary results of Operations of Prestige Data Services for the first quarter of 1997 revealed a net loss which opted top management to appraise what alternative courses of action should be undertaken to improve the performance of the subsidiary and prevent its closure.
V. Objectives
1. To analyze the results of operations as they have been reported, and to understand the origin and nature of receipts, revenues, expenditures and expenses.
2. To develop an understanding of the economics of a business and to use that understanding to forecast the potential change in income which would occur if various alternative courses of action were selected by management.
3. To understand the importance of the way in which cost
Point of View: Management Consultant
I. Issues and Concerns:
■ In 1999, the Public Service Commission encouraged all public utilities to: 1. seek new sources of revenues and profits since heading towards deregulation; and 2. To reduce the need for rate increases.
■ Prestige Telephone Co. realized that a centralized service that could plan, control, and account for its own operations could benefit themselves and other businesses in the region.
■ Utilize the current telephone circuits and sell extra computer time not needed by the telephone company.
■ Prestige Data Services performed data processing for the telephone company and sold computer services to other companies and organizations.
■ Daniel Rowe, President of Prestige Telephone believed that a profitable subsidiary would reduce pressure for telephone rate increases.
■ Susan Bradley, Manager of Prestige Data Services believed that given more time, the subsidiary is yet to experience profit, but Daniel Rowe felt action was necessary to reduce the drain in company resources.
II. Statement of the Problem:
1. The summary results of Operations of Prestige Data Services for the first quarter of 1997 revealed a net loss which opted top management to appraise what alternative courses of action should be undertaken to improve the performance of the subsidiary and prevent its closure.
V. Objectives
1. To analyze the results of operations as they have been reported, and to understand the origin and nature of receipts, revenues, expenditures and expenses.
2. To develop an understanding of the economics of a business and to use that understanding to forecast the potential change in income which would occur if various alternative courses of action were selected by management.
3. To understand the importance of the way in which cost