3. 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.

4. 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.

5. 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.

6. AT&T’s RESTRUCTURING PLAN
• AT&T reorganized into four independent
publicly-
 AT&T Wireless
 AT&T Broadband
 AT&T Consumers
 AT&T Business

7. 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.

8. 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.

9. 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.

10. 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.

11. Q3.What issues did CEO Dorman face in 2003?What steps are being taken
by 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

12. 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