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Sprint Nextel Merger Analyzed

Sprint Nextel Merger Analyzed



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Published by andryharyanto
IOE 522 Sprint Nextel Final
IOE 522 Sprint Nextel Final

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Published by: andryharyanto on Apr 24, 2008
Copyright:Attribution Non-commercial


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IOE 522 Integrative ReportSprint Nextel Merger  Analyzed UsingOrganizational Metaphors
Prepared for Prof. Jeffrey Liker and GSI Murray PylePrepared by Andry Haryanto, future Sprint Operations Analyst April 12, 2008
Sprint Nextel Merger History 
Sprint is a US wireless carrier based in Overland Park, Kansas. In December 2004, it an-nounced its plan to acquire Nextel Communications to create the third-largest wirelessprovider in the US, behind AT&T and Verizon. The deal was completed in August 2005.
Sweet marriage proposal
On paper, the merger seemed like a good combination. Sprint was building reputation as aleader in developing content for the consumer market. Meanwhile, Nextel was selling itspress-to-talk feature to gain loyalty from construction crews, taxi companies, and othersimilar businesses. Their disparate yet complimentary assets could have provided a highpotential of value creation. Sprint, which traditionally provided long-distance and localphone connection, was turning its focus to consumer wireless services and wanted to in-corporate Nextel's strategy into its business model. Nextel, which was close to maxing outits network and clientele of business users, would gain access to Sprint's larger customerbase. [1]
IOE 522 - Sprint Nextel Merger Viewed Through Organizational Metaphors
Bitter honeymoon
Since the completion of the 35-billion-dollar deal in August 2005, Sprint Nextel has faced amultitude of problems. The blockbuster merger incurred great expenses and integrationproblems. To make matters worse, Sprint Nextel was facing technology problems, strongcompetitors, and cost-conscious consumers. Many customers fled the company frus-trated by the customer service quality. [1] The signs of failure were becoming apparent at Sprint Nextel. Revenue per customer keptdeclining while the stock price plunged more than 30% in October 2007 compared to2004. In that same month, Gary Forsee, former CEO and architect of the merger, finallywaved the proverbial white flag and resigned from the company. Sprint laid off about 8% of its 60,000-strong workforce. Management announced a plan to invest $8.5 billion into cus-tomer service, an effort that proved too little, too late. [2]
Failure to integrate two cultures
 A blend of two contrasting corporate cultures resulted in conflicts in almost every aspect of Sprint Nextel's business, severely hurting its chances to reap the benefits of the merger.
IOE 522 - Sprint Nextel Merger Viewed Through Organizational Metaphors

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