ZTC, a telecommunications company, has recently been privatised by the government of Zeeland after legislation was passed that removed the state monopoly and deregulated the communications market, opening it up to competition from both national and overseas companies. Prior to this deregulation, ZTC was the sole supplier of telecommunications in Zeeland and was required to provide 'the best telecommunications service the nation can afford'. At that time the government dictated the performance levels required for ZTC, and the level of resources it would be able to bring to bear to meet its objectives.

Following the privatisation, ZTC's shares were floated on the Zeeland Stock Exchange, with 80% being made available to the population of Zeeland and up to 20% being made available to foreign nationals. The government of Zeeland retained a 'golden share' to prevent the acquisition of ZTC by any foreign company. However, the privatisation meant that many of the traditional ways in which the industry had operated would need to change under the new regulations. Apart from the money received from the flotation, the government privatised ZTC in recognition of both the changing global environment for telecommunications companies, and the overseas expansion opportunities that might exist for a privatised company. The government recognises that foreign companies will enter the home market but feels that this increased competition is likely to make ZTC more effective in the global market.

Required:

(a) With specific reference to ZTC, discuss how the external environment can affect an organisation's performance. (10 MARKS)

(b) Explain why the objectives of ZTC will need to change as a result of its privatisation and the deregulation of the market. (15 MARKS)