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Transcription of this question: 5.AnsellAnsell is a state-owned telecommunications company in Uruguay, South America. It has a25 % market share Of the home telephone market and has experienced slow growth in revenue overthe last 10 years.In 2005, the Uruguayan government passed legislation to allow foreign companies to enter thehome telephone market. Immediately, ,4110, a French multinational telecommunications company,spent large amounts Of money setting up a network, as selling in Uruguay was seen as a way Ofentering the South American home telephone market. -4110 soon became the market leader andits market share doubled that Of Ansell. Ansell missed out on opportunities to compete and earnsubstantial profits due to limited finance, inappropriate technology and an autocratic leadership style.The Uruguayan government is now passing further legislation to enable even more competition inthe home telephone market. Ansell has three options.• The first option for Ansell is to merge with Ronaldo, a telecommunications company basedin Brazil. Ronaldo has a different leadership style to that Of Ansell and is also struggling financially.The financial and marketing benefits from the merger could be considerable for both companies.However, Ansell realizes that the corporate culture Of the two companies are very different, whichmay lead to potential diseconomies Of scale. Furthermore, a number Of redundancies would beinevitable.• A second option is to form a joint venture with the Italian multinational telecommunicationscompany P,’0nt0. Consequently, Ansell could benefit from Pronto S up-to-date technology,knowledge and global experience in the home telephone market to compete against -4110.In return, Pronto would be able to research potential opportunities to enter into the SouthAmerican home telephone market. Unfortunately, Pronto can only commit to the joint venturefor one year, which may not give Ansell enough time to compete effectively with -4110.As a third option, Ansell could increase its customer base by expanding its services to therural areas Of the country, where -4110 and Other competitors are not currently operating.Ansell is developing a new service called “Rural-Ansell” to cater for the needs Of this promisingmarket segment. However, the company’s limited finance may compromise this alternative.(a)(b)(c)(d)Define the following terms:(i) corporate culture(ii) diseconomies of scale.Explain two reasons for the growth Of multinational telecommunicationscompanies in Uruguay in the home telephone market since 2005.Analyse the consequences Of clashes in leadership styles if Ansell and Ronaldomerge (first option).Discuss the second and third options available to Ansell.[2 marks][2 marks][6 marks][6 marks][9 marks]

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