Reorganizing AT&T: From Vertically Integrated to Customer-Centric Organization (A)


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Case Details:

Case Code : BSTR077
Case Length : 15 Pages
Period : 1876 - 2003
Organization : AT&T, Department of Justice (US)
Pub Date : 2003
Teaching Note :Not Available
Countries : USA
Industry : Telecom

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS Contd...

The Acquisition of NCR

During the early 1990s, with increasing competition in AT&T's long-distance communication business, the company decided to diversify into other related lines of business in an attempt to lower its dependence on its traditional sources of income.

In spite of its earlier failures, AT&T's management decided on further expansion in their computer business. This expansion was an attempt to realize the synergies that the management believed existed in integrating the computing and communications businesses. In 1990, Allen became AT&T's Chairman and CEO. He started looking for a computer company that AT&T could acquire. AT&T identified the Dayton-based NCR Corporation (NCR), a company which reported a profit of $400 million on $6 billion revenues in fiscal 1990. NCR was particularly strong in open systems, especially computers running on UNIX, and its customers were concentrated in the banking and retailing sectors - sectors that AT&T felt might also profit from more investments in telecommunications...

AT&T Till The Mid-1990s

Apart from the NCR acquisition, AT&T made other efforts to strengthen its overseas presence through several joint ventures. For instance, the company formed joint ventures with British Telecommunications(1991) and Italtel(1989) to produce and market telecommunication products in Europe.

AT&T also began to leverage on its technology and huge financial muscle to gain access to a few of the world's toughest telecom markets like Japan and European countries. In 1991, AT&T's hard-hitting commercials and sales efforts helped in slowing the erosion of its market share to a certain extent. Apart from focusing on the computer business, AT&T also paid attention on the emerging wireless markets. In 1993, AT&T announced a merger with McCaw Cellular Communications, the largest provider of cellular service in the US. The acquisition was later renamed AT&T Wireless. In spite of its renewed focus on international operations, AT&T suffered operating losses in Europe, Japan and other units outside the US during the period 1992-95...

Exhibits

Exhibit I: Bell System (Pre Break-Up)
Exhibit II: Important Events in Bell System's History
Exhibit III: AT&T (Post Break-Up)
Exhibit IV: AT&T's Changing Logos
Exhibit V: Changing Structure of Telecom Industry in the US (1895-1995)
Exhibit VI: Financial Performance of AT&T (1985-1995)

 

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