“Raising The deal took place on October
“Raising the Bar”Cingular, one of the nation’s largest wireless phone providers recently announced its forty-one billion dollar purchase of AT;T wireless. The deal took place on October 26, 2004. The merge of these two major corporations opened the doors for change.
AT;T encountered some difficulties within the past year that brought up the question to sell the company. AT;T struggled to add new subscribers because of a glitch in their new software system. The system was designed to improve customer service but instead it caused more problems for the company as well as its customers. The company also faced problems losing more customers than they were gaining due to new federal rules and regulations that took place in November of 2003. These rules allowed phone users to change service providers without losing their current phone numbers.
Cingular, at the same time was looking to cut costs, fill cellular service gaps and expand their coverage area. Since AT;T faced numerous problems and Cingular was on the lookout to expand, the merge was seen as beneficial to both companies. The merge brought about many advantages. One of the major advantages for the merge was not only was Cingular now the largest wireless company in the industry having the most coverage area, but it removed one of the major competitors in the wireless industry. This removal would stabilize the industry so that carriers could more easily invest in new services. Another advantage for purchasing a company like AT;T was that both companies ran off of the same network technology making the integration of both companies easy. The merge more than doubled the customer base for Cingular.
Going from a mere 23.4 million customers to 46.7 million customers. The management at Cingular would have a lot of work on their hands. To deal with these changes Cingular management will have to lay off employees from both companies.
Many positions are a duplicate of what Cingular all ready has. The top management teams from both companies will have to come together and make some huge decisions about who is going to hold what positions and what goals will need to be set for the success of the company. Teamwork and communication are going to be the keywords during this time of change. If each member of the company goes in their own direction the company will continue to fall. Teamwork involves the Cingular customer service representatives training the new AT;T representatives about their system.
The existing Cingular employees will need to communicate clearly with the AT;T representatives and ensure that there are no questions remaining. If there is any confusion problems could arise. For example, if the current Cingular representatives do not clearly explain the current wireless plans Cingular offers, then the AT;T representatives might falsely inform the customers.
This would lead to irate customers who might choose to take their business elsewhere. The merge will also empower existing Cingular employees. Management will have so much work on their hands that they will not have time to worry about and deal with every single problem that arises with the new employees as well as the customers. In the text Management by Richard Daft, Empowerment means “unleashing the power and creativity of employees by giving them the freedom, resources, information and skills to make decisions, while empowerment expands their behavior”(Daft 56). This will create better customer service. Instead of having to wait on managers to solve problems the employees can solve them, speeding up the problem solving process.
Along with advantages come disadvantages. The consolidation of the two corporations brings an end to the decreased prices that users enjoy as a product of intense competition. It would also lead to major layoffs as well as management changes. John Zeglis the chief executive officer (CEO) of AT;T recently told reporters that he will not remain with the company once it merges. This will put a lot of stress on the current CEO of Cingular, Stan Sigma. He will not have the president and CEO of AT;T to help him through the changes.
This could be a disadvantage because instead of having two different outlooks on situations the new company will only have one. Another problem facing Cingular management is analysts predict that six to twenty percent of the 46.7 million customers will leave the company within the next six to twelve months (“For Cingular, Now Comes the Hard Part”). In an effort to try and keep their current customer base Cingular will need to differentiate themselves from the rest of the companies in the wireless industry. They will need to emphasize that they are now the largest wireless company in the industry with the largest coverage area compared to the other wireless companies namely Verizon their biggest competitor.
They will also need to capitalize on data-services that is the fastest growing wireless market. Both Cingular and AT;T ranked last in data-services when compared to other leading wireless carriers. In order to capitalize on this market it will cost Cingular millions of dollars. This is also somewhat of a disadvantage for Cingular. The merge left Cingular in debt way over their heads.
Upgrading to new and better services will cause the company to remain in debt for a longer period of time. Based upon the advantages and disadvantages that I have highlighted upon through this essay I thoroughly agree with the merge of Cingular and AT;T. The merge has allowed Cingular to increase its customer base and grow to become the largest wireless company in the industry. The combining of these two forces has given Cingular the opportunity to compete against their biggest competitor Verizon, whereas before it was struggling to remain one of the top wireless service providers.
The merge also gave AT;T a chance to remain in the wireless industry. They were falling further and further as a company before Cingular bought them out. The merge has had more advantages than disadvantages for the two companies including better coverage, increase in customer base, improved reliability within the company as well as the wireless service, and enhanced call quality. With good leadership, teamwork, and communication throughout the company Cingular can prove to other companies who doubted the merge that it really was a success. Works CitedDaft, Richard.
Management. 6th ed. Ohio: South-Western, 2003.Kharif, Olga. “For Cingular, Now Comes the Hard Part.” Business Week 1 Oct.