Teletech Corp Case Analysis Essay example

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Pages: 5


Teletech is a business process outsourcing multinational Organization, founded in 1982 by Kenneth D.Tuchman and headquartered in Englewood, Colorado. Teletech provides services for customer management, transaction-based processing, database marketing services, professional sales and eCommerce. Teletech operates in diverse industries of Automotive, Communications and Media, Financial Services, Government Services, Healthcare Services and Technology. The firm is based in 17 countries with a total of 62 delivery centers. The company is listed on NASDAQ (National Association of Securities Dealers Automated Quotations) stock exchange, which is the second largest stock exchange after the New York Stock Exchange in terms of market
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Services are below 9.8% and the returns on Product and Systems are above 11 % but in the greater risk area.

Money is green but it can be greener.Teletech can further improve their performance by the use of multiple hurdle rates as it will create more value for the company.
Helen Buono’s favourable argument is that diversification helps the company keep the capital costs down and enables the corporation to borrow more in total than the sum of the capabilities of the divisions separately.

Helen Buono’s argument saying that a single hurdle rate may deprive an under profitable division of investments in order to channel more funds into a more profitable division is not quite logical because if several less risky projects although less profitable are undertaken it will benefit the company without any doubt unless in the case of putting away many low risk projects for a single high risk project.

I don’t agree with Helen Buono that management would destroy value if all the firm’s assets were redeployed into only the telecomm. business segment because it has higher economic profit for a risk adjusted hurdle rate and as it lies in low risk region, I don’t think the management would destroy value of the firm.

Products and System has not destroyed value coz Economic Profit on the common hurdle rate is high. That means that although high risk projects were undertaken, the rate of return on them was also quite