THE CASE AT&T split into three stand alone companies- the New AT&T, Lucent Technologies, NCR.• Restructuring aimed – more responsive to customers and competition.• Another break up- poor stock performance & inability to face intense competition.• Shift from traditional long distance telephony business to fast emerging communication & information services business.
THE BREAK UP• New AT&T – provide world’s best communication & information services.• Lucent – took over business of designing, developing and manufacturing of telecommunication system, software & products.• NCR – Dealt in IT products, services, systems &solutions worldwide.
AFTER THE BREAK-UP• The Telecommunication Act 1996.• AT&T faced stiff competition from large players like MCI & US Sprint.• New policies adopted by Michael C Armstrong, the new Chairman & CEO of AT&T.
AT&T’s RESTRUCTURING PLAN• AT&T reorganized into four independent publicly- AT&T Wireless AT&T Broadband AT&T Consumers AT&T Business
DORMAN’s DILEMMA• The major was the declining revenues and bring AT & T back on the growth path• AT&T got fierce competition from its Local exchange carriers-RBOCs.• AT&T’s fixed line business was also hurt – as its corporate customers were not giving good business – Affected by FCCs plan to disallow the company access to local telecom service market – Its right to purchase local service at wholesale prices are going to get effected by the regulations.
REORGANIZATION IN 2003• April 2003- Dorman announced the reorganization of AT & T• Dorman felt that several layers of management had made AT & T lethargic and unresponsive to the needs of the customers• The reorganization would reduce the layers of management between the CEO and line workers from 14 to 7• Two divisions left-AT&T Business and AT & T Consumer• After reorganization, Dorman in the year 2003 tried to reduce the Debt of US$65 Billion to US$10 billion at the end of 2003.
Q1. Critically examine the break-up of AT&T in 1995 and the changes in its organizational structure. Do you think the break-up was successful in achieving the management’s objectives? Why or why not?• From vertically integrated to matrix structure.• No.
Q2. What were the reasons that led to the restructuring of AT&T in October 2000. Examine the organizational structure of AT&T after the restructuring , and compare it with the previous structure?• To prepare AT&T face competition in the emerging business including wireless & broadband internet.• Previously AT&T was having matrix structure and now from matrix it has adopted a divisional structure.
Q3.What issues did CEO Dorman face in 2003?What steps are being takenby him? Do you think the sale of AT&T to any of RBOCs will be a right move?Issues are:-• The major was the declining revenues and bring AT & T back on the growth path• AT&T got fierce competition from its Local exchange carriers-RBOCs.• AT&T’s fixed line business was also hurt due to many reasons
Steps taken by Dorman• Elevating customer care team in both AT&T Business and AT&T Consumer - Each unit is directly supported by the departmental head• Billing operations in customer service organization• All major AT&T retail channels are under one unified customer-facing sales organization - Helps AT&T a greater accountability and greater customer reach• Integrating all management segments into a single organization - Helps customer having seamless, integrated solutions