France Télécom (A): A Challenging Restructuring

These cases explore the impacts of industry shocks, resulting corporate actions that had a devastating impact on employees, and the legal conviction of corporate leaders for “institutional harassment."

This case series follows the evolution of France Telecom from a national telephone monopoly to a private company facing two severe challenges: (1) The company’s competitive advantage as a land-line carrier is being challenged by mobile carriers and the entry of new competition from other countries; and (2) the workforce is much larger than required by the company’s new strategy, yet many employees are civil servants, making it very difficult to reduce headcount, despite many attempts to do so. As increasing pressure is mounted internally, the culture shifts from one where employees are proud to work to one described as “tense, even violent” and the physical and mental wellbeing of some employees becomes increasingly “fragile.” The further impact of these developments is outlined in the (B) and (C) cases.

The (A) case describes the development of the situation, the competitive challenges that prompted it, key decisions made by corporate leaders, and the impact of the same on various stakeholders. The discussion begins by asking students to apportion responsibility –how much is due to labor laws, to industry change; to past management; to current management; to the employees themselves? Have corporate leaders pushed employees too far, creating unacceptable levels of stress and unhappiness? What levers do leaders have to keep a business relevant and to do so in a way that is fair to all stakeholders? At its most fundamental, the case series helps students confront some fundamental tensions between the pressures and benefits of capitalism, the responsibilities of management, and the day-to-day and long-term impacts on employee well-being.