merger& acquistion
Sprint and Nextel Communications
Nextel communications Inc was established in 1987 its first name was Fleet Cell and changed to Nextel communication Inc in 1993. Nextel communication basically provided a wireless service to its customer .it was a publically traded company and its share were traded under the ticker name of Nextel on NASDAQ.
Sprint was founded in 1899 it provided long-distance and local phone connections and internet Sprint catered to the traditional consumer market. Sprint Nextel merger took place in 2005 when sprint acquired a large stake in Nextel communication and wanted to become the third biggest telecommunication provider after the AT&T and Verizon.
Reason to Fail Merger
The major reason behind the failure of the merger was the differences between the culture of both companies Sprint was bureaucratic and Nextel was entrepreneurial .Due to these differences within short period of time after the merger Nextel executive and middle level management started leaving the organization .Nextel was customer oriented organization while Sprint had a bad reputation in customer service and have a high turnover rate in the industry .there was lack of trust and Nextel employee always had to seek approval from Sprint's higher-ups in implementing corrective actions due to these reason company lost the market share. In the beginning of merger both of the companies had separate head office and executive had large problems in coordination and managers and employees diverted attention and resources toward attempts at making the combination work at a time of operational and competitive challenges.
Due to sharp increase in the capital expenditure and decrease in the income, the company tried to cut down its production cost by laying off its employees, also the company was facing a stiff challenge from its competitors in the market. With all these factors the merger was not able to sustain and failed miserably.
Nextel communications Inc was established in 1987 its first name was Fleet Cell and changed to Nextel communication Inc in 1993. Nextel communication basically provided a wireless service to its customer .it was a publically traded company and its share were traded under the ticker name of Nextel on NASDAQ.
Sprint was founded in 1899 it provided long-distance and local phone connections and internet Sprint catered to the traditional consumer market. Sprint Nextel merger took place in 2005 when sprint acquired a large stake in Nextel communication and wanted to become the third biggest telecommunication provider after the AT&T and Verizon.
Reason to Fail Merger
The major reason behind the failure of the merger was the differences between the culture of both companies Sprint was bureaucratic and Nextel was entrepreneurial .Due to these differences within short period of time after the merger Nextel executive and middle level management started leaving the organization .Nextel was customer oriented organization while Sprint had a bad reputation in customer service and have a high turnover rate in the industry .there was lack of trust and Nextel employee always had to seek approval from Sprint's higher-ups in implementing corrective actions due to these reason company lost the market share. In the beginning of merger both of the companies had separate head office and executive had large problems in coordination and managers and employees diverted attention and resources toward attempts at making the combination work at a time of operational and competitive challenges.
Due to sharp increase in the capital expenditure and decrease in the income, the company tried to cut down its production cost by laying off its employees, also the company was facing a stiff challenge from its competitors in the market. With all these factors the merger was not able to sustain and failed miserably.