Strategic Management Unit 5 DB - Essay Example

Sprint and Nextel Merger Sprint and Nextel Merger The union between Sprint and Nextel Communications occurredin 2005. The motive behind this merger was to create a giant and happy communication synergy by the two opposite ends of the market in which they operated. The companies would fuse Sprint’s cell phones and home services with Nextel’s business infrastructure. Unfortunately, the joint venture experienced problems with Sprint losses accruing to a whopping 29.7 billion in 2007 quarter (Ireland, Hoskisson & Hitt, 2008).

The merger was doomed for failure because of many reasons.After staying in the marriage for a short while, Executives and managers from Nextel walked away from the join venture in hordes. Their main reason for breaking the bond was that the cultures of the two companies could not accommodate each other. Incompatible networks and ugly phones resulted into bad customer experience. It was difficult to merge assets and liabilities of the two firms hindering the creation of the much anticipated synergy (Ireland, Hoskisson & Hitt, 2008).

Economic down turn also begun to take a biting turn and customers expectation grew large and larger. Further, stiff competition form market rivals such as AT&T, the iPhone, as well as Verizon, ate away significant market share driving down the sales of the joint venture.In most cases, mergers and acquisitions have negative impact on employees. The case of Sprint and Nextel merger was no exception. Moreover, the difficult times after the merger only impounded more misfortunes for the employees of the two companies.

Amidst the crisis of the joint venture, it started to lay-off workers in a bid to reduce operating costs. An employee who never obliged to the strict policies by taking some break from work as a result of his father’s death was mercilessly fired (Ireland, Hoskisson & Hitt, 2008). The merger was no good news for employees of both firms. ReferencesIreland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases, 2nd Ed. Mason, OH: South-Western Cengage Learning.