The employee letter criticized Deutsche Telekom for having too many employees, high costs, and failing to keep up with competitors. It was addressed to the CEO and others in an effort to express concerns about the company's direction. Stakeholders, customers, employees, and the CEO would all have felt negatively impacted by the letter to varying degrees. As a middle manager, engaging with employees through both formal and informal discussions would be important to address issues and reassure employees. While the letter damaged Deutsche Telekom's reputation, the new CEO was ultimately able to make changes that improved the company's position over time.

1. DEUTSCHE TELEKOM CASE
ANALYSIS
Business Strategy Case Study #2
OCTOBER 22, 2015
JACLYN VITALE

2. 2
Introduction
All companies face some obstacles throughout their course, whether they arise internally,
externally, or both, they are inevitable. The thing that matters most is how a company chooses to
handle those obstacles. This is something that was presented in the Deutsche Telekom case. It
was a matter of dealing with something that would forever change them, something that had the
great potential to break them. The backlash that the CEO of Deutsche Telekom received was not
something that could be anticipated, but it was something that had to be resolved quickly and
correctly in order to salvage the company.
Major challenges for Deutsche Telekom along with aspects critical for survival and future
success
Deutsche Telekom faced many challenges both internally and externally. On the internal
side of things, they had too many employees, they were a public company that was trying to
become private and it just was not working out the way they needed it to because they were
incredibly overstaffed. It is stated in the case that,
“Headcount was undoubtedly one of DT’s major problems. With around a quarter million
people, the company was bloated beyond comparison with any of its competitors.
Successive CEOs had been faced with the same need to cut costs and streamline services
but were thwarted by the same inability to dispense with workers, many of whom were
civil servants who could not be made redundant” (2, part a).
Not only did Deutsche Telekom have too many employees, but they had too high of costs and
they were not keeping up with their competitors, they were falling short and releasing new
products when it was too late. Their employees were unhappy because DT was trying to cut costs
and wages, but in doing so they were also trying to increase labor hours. In the case it is stated
that,
“Not only were there too many employees, many of them were also being paid more than
the industry average for their jobs. There was no escaping the fact that DT’s costs were
uncompetitive, even if one assumed it was providing the same quality and level of service
as its rivals. And, arguably, that was the other problem: the huge, well-paid staff was not
necessarily matching its rivals’ performance” (2, part a).
With unhappy workers and a lack of innovation in terms of their products, consumers as well as
employees looked to the competitors of DT to find satisfaction. Many consumers were
displeased with the customer service or lack there of that DT provided, and with that DT really
hurt the image of their brand and dug them into a deep hole externally. The many challenges that
Deutsche Telekom faced lead to the breaking point of one employee, who decided to express
their concerns through a well thought out, very descriptive letter to the CEO, selected members
of the board of management, union representatives, and a few of his colleagues.
Thoughts from perspective of various stakeholders, customers, the general public, and
employees on the letter

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From my perspective, the evidence shows that essentially each of these groups of people
would have similar feelings about this letter. It it something that negatively effects them all.
Stakeholders would be very concerned with the publication of this letter, due to the negative
economic effects that could come with it. If the company is being shown in a bad light to
everyone, it is going to lose investors, consumers, and employees. Customers would probably be
the ones asking why, because they are the most out of the loop in terms of what goes on within
the company. Customers are unaware of the way that employees are treated, or of the way those
employees feel. They are unaware of the way that things are run or dealt with within the
company because they are outsiders. However, they would still probably be more sympathetic to
the receivers of the letter than to the employees because they do not know what they do not see.
From just seeing this letter and nothing else customers might think that the employee is just
attacking the company in order to get some money or to gain some edge, not because they are
looking out for the best interest of the company and those within it. The general public would
probably be feeling the same way as the customers, they just would not know what to think of it
really. They would be concerned with the brand image of the company, it was already not so
good before this letter came out, and as a result of the letter it would definitely get worse. This
letter is something that would have an extraordinarily large impact on the employees, leading
them to be worried. Worried about the change that lies ahead, worried about rumors circulating,
worried about the uncertainty of their jobs and the company as a whole, worried about the future.
Emotions felt as CEO receiving the letter and reaction
In the hypothetical situation of being the CEO of this company, the evidence shows that
the CEO would be offended if they received a letter like this. The CEO would feel both
displeased and disrespected in a sense. It is definitely something that one would take personally,
but would potentially want to do something about it. The CEO would want to do their best to
make things right for everyone involved. This letter could be seen as a personal attack; the
employee is taking everything out on the people that are superior to him. It seems that this would
leave the CEO feeling unfairly accused because as CEO they would be doing the best that they
possibly could for the company, it would hurt to see how unhappy they may have made their
subordinates. However, in order to grow from it and become more successful in the future, the
CEO would start with themselves. Take the thoughts and concerns throughout the letter into deep
consideration and look for ways to mend it, ways to put it all back together. Build from it.
Employees need to feel that they can voice their concerns and have hope that those concerns will
be considered. It is highly probably that the CEO would still be very irritated by the whole thing,
but would not want it to be the way that they or their company went under. The CEO would try
their best to regain the control that they had lost over their organization.
It is unsure to me if it was in Obermann’s best interest to respond with a letter of his own,
but that is the easiest way to reach the largest number of people. He had every right to have his
voice heard and the opportunity to defend himself to the same audience that he was torn apart to,
but it seems as though he contradicts himself. He made excuses for himself and the company. He
acted as though they were an open forum for suggestion, but he did not speak of any change in
his letter that was in direct relation with the one that he received. His letter was cookie cutter in a
sense. He knew what he was supposed to say in order to defend himself and the company, and it
is exactly what he said. In the end it may have been in his best interest to make the letter a little

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more personal, he needed to let people know that he was open to change and suggestion for not
only the best interest of the company and the consumers, but the employees as well. I guess it
would not be solely up to the CEO to address the concerns of the employees, because they are
looking out for the business as a whole, they have to deal with the bigger picture. Employee
concerns would probably be talked about more by middle management.
Engaging in discussion about letter with employees as middle manager, type of setting,
things said or asked.
As middle manager one would feel a disconnect that would exist between the CEO and
the front line employees. The middle manager would need some mental preparation (and
hopefully would receive some support) in order to enter the workplace after everything had taken
place. It would be their responsibility to take matters into their own hands and attempt to take
things under control. To find a way to gain the trust of their employees. In order to do that, they
would need to discuss the letter with the employees. Through this discussion they could search
for the underlying issue of the fiasco. They would need to get to the root of it before deciding
what steps to take in order to makes things better. The middle manager would definitely expect a
push back and some hesitation from employees. However, in response, it would probably be
helpful to offer an open and welcoming environment that would allow new ideas to be expressed
and addressed, in order to give the employees a voice and make everyone happy. Things could
potentially be resolved through the conduction of surveys, through meetings—sharing thoughts
and feelings, and through causal conversations.
It could be important to have both a formal and an informal setting of discussion in order
to reach a resolution. On one hand, the importance of a formal setting is to just imply that as a
middle manager they are still in charge and were also affected by the letter. On the other hand,
the importance of an informal setting would be to let the employees know that they are not alone,
that they are being heard, and that they are allowed to say what they want to (but with respect).
An informal setting is necessary in order to make employees feel more comfortable about
placing their concerns, which is what the company needs.
Evidently, it could be assumed that reassuring things would be said to employees from a
middle manager, because they would need to feel that everything was going to be okay in order
to want to continue working there. A middle manager would ask for feedback and suggestions,
while employees would just want to know what was going on, i.e. where the company is at
during this time of high stress.
Conclusion
In conclusion, the letter definitely did more damage than could have been foreseen. The
employees never really let up, and a strike resulted. This brought more threats to DT, however
Obermann was seen as the “winner”,
“The media agreed that Obermann had got his way. The Financial Times Deutschland
said: ‘DT’s boss, René Obermann, ended the crippling soft line of his predecessors and
took up a confrontational struggle for power with the union ver. di. He has now won this
struggle, beyond any doubt’” (3, part c).

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Being seen as the winner did not exclude Obermann from suffering. He was nervous that history
would find a way to repeat itself. It did,
“Obermann has gained credit in the public eye by being clearly innocent of involvement.
The revelations that the company had spied on its own employees, illegally abusing its
ability to check phone records in an effort to trace the source of leaks to the press, did
further damage to the company’s reputation, but the events predated Obermann’s
leadership and he was able to denounce the wrongdoing in strong terms without
compromising himself”
Obermann was able to turn things around for the company and himself. He dogged most of the
bullets that came his way and basically turned into a German celebrity.

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Exhibit 1: SWOT Analysis
Strengths Weaknesses
Exhibit 1 is a brief overview of the strengths, weaknesses, opportunities, and
threats that Deutsche Telekom (T-Mobile) experienced. It is a condensed and
simplified version to show just how much the letter impacted them in all aspects.
-One of the world's largest
telecommunications companies
-248,000 employees worldwide
-Market is not just local-- worldwide.
-Poor customer service
-Poor brand image
-Too many employees
-Lack control
-Do not have much customer support
-Costs are too high
-Falling sales/profits
-Employee wages higher than average
-No government support
-Have the opportunity to change things and
rebuild as a result of the letter
-Can decide how they want to resolve the
letter fiasco
-Are ablet to get feedback from employees
to improve the overall structure of their
company
-Competitiors are more innovative
-The LETTER
-Unhappy employees (strike)-- will leave
-Attack on leader (style and character)
-Threat of the Union
ThreatsOpportunities

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Exhibit 2:
Porter’s Five Forces
Competitive Rivalry
 Many competitors
 Productinnovation
is huge
Threat of New Entrants
 Not a large threat
 Stable

Buyers
 Want the most
innovative and
modern product
they can get
 Are willing to pay
high prices in
order to get what
they want
 Want good
quality—reliable
 Brand loyalty
Substitutes
 Local networks—may
have better service
o Cellcom
o Cricket Wireless
 Sprint
 AT&T
 Verizon*
*Top rated coverage
Suppliers
 Apple and
Samsung arethe
frontrunners that
all the buyers want
o Team iPhone
vs. Team
Android

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Bibliography
Do you really think we are so stupid? A letter to the CEO of Deutsche Telekom, Konstantin
Korotov, Urs Mueller, Ulf Schaefer, parts: A-C