Innovative MCI Unit

Finds Culture
Shock in Colorado
Springs

Group 5
Background
Low cost and convenience to gain market share are key factors in location decisions. Facility
Location is the best location for the production facility; it will have adequate access to
customers, workers, transportation, etc. The expansion of markets to meet rising demand is a
component of marketing strategy. The discussion of MCI's move to Colorado Springs is the
study's goal. MCI Communications Corp. opted to move the Systems Engineering branch,
which produced a number of ground-breaking innovations, from its Washington, D.C.
headquarters to Colorado Springs. The decision cut off the engineers at MCI from their
marketing and top management counterparts at the corporate office, undercutting the
impromptu collaborations that had led to some of the company's most inventive products.
Employees of MCI were Numerous key executives, engineers, and hundreds of division
minority populations were retained by large relocation offers, but after making the transfer,
they either said no or left Colorado Springs right after. Many of the rank-and-file workers
were excited when the transfer was announced. The relocation policy of MCI covered all
potential costs. Minority representation has decreased since the move. To around 600
African-Americans and 500 Asians and Hispanics collectively was almost a half reduction,
which was a catastrophe.

Statement Of the Problem

A.) The multiple store location (MULTILOC) models were designed using the site planning
choices that were available, but most of the savings were never realized.

B.) The risk involved in MCI Communication Corp.'s location decision increased the move's
overall cost to around $200 million or 10 billion pesos, which was significantly higher
than MCI management had anticipated. Most of the savings were also never realized.

C.) According to the standard procedure for choosing a business location, MCI
Communications Corp. takes into account how best to position itself in a changing
competitive environment. With the help of advancements in telecommunications and
transportation infrastructure, today's executive can successfully coordinate numerous
corporate functions across a variety of locations.

Areas of Consideration
• When moving to a new location, MCI must take their employees' thoughts into account
• Avoid unnecessary spending when moving a location to Colorado Springs.
• Elimination of hiring more engineers and cheaper workers.
• Location choices made in an uncompetitive context lead to calamity.

Alternative course of Action

Due to our focus on cost reduction, we must now draw a conclusion to our locational cost profit
volume analysis. When the company's finances are in bad shape, simplifying operations,
deferring investments, reducing stock levels, improving communication, and refraining from
extending temporary contracts are all recommended. However, another strategy is to keep people
focused on your primary business. The business can fully focus on bolstering and enhancing
operations.

Recommendation:
The fact that key executives from MCI left to join other businesses is significant because it illustrates how
well the other businesses were doing in Atlanta. The technical employees that are African Americans,
Asians, and Hispanics do have a good retention rate as a result. Moving to Atlanta may also give MCI the
opportunity to disregard other companies and give the business more benefits or possibilities. To make
this decision a good one, the advantages of this course of action exceed the disadvantages.

Management Lessoned Learned

One of the lessons learned from the case study was the peril of trying to make hasty decisions based on
personal opinions rather than statistical analysis or correct and trustworthy information about the many
issues or scenarios.