Business Management - Report Example

Name: Institution: Title: Business Management: T Mobile and Orange in U.K Merger Tutor: Course: Date: Introduction Mergers are often defined as business strategies that involve buying, selling or combining the operations of two or more companies so as to increase sales, client base and presence in the market without having to set up a new business outlet. Just the other year in 2010, two leading mobile phone companies in the United Kingdom namely T Mobile and Orange decided to combine their business entities into one as a way of increasing the market share in terms of client coverage. Such a move will result in increased efficiency in terms of lower prices while the overall telecommunications industry will be in a position to allow service providers to offer indiscriminate services to all equally. Other benefits include better services and products though the management of the two companies can handle the change by involving specialization in responsibility delegation. Discussion Implications of the takeover for all of the relevant stakeholders (current and potential) There are a number of stakeholders, who will be affected by the T Mobile and Orange merger for instance the government, employees, customers, suppliers, community and creditors on either side. All these categories of stakeholders include present and those who will be incorporated into the firms at a later stage. The government as a stakeholder will lose from the merger between T Mobile and Orange as revenue in terms of tax will be reduced. This is because when a low profit making firm is merged with a high profit maker, the new entity will tend to pay taxes as per the low profit making firm was category. This way the new merged firm will be subjected to lower tax rates. The government will lose as relies on the taxes of such business ventures to plan its national budget therefore, alternative sources of revenue have to be sought to fill that gap. As a stakeholder the government will have to be content with fewer number of mobile phone companies in the county as there will be subsequent reduction as the merger will convert two into one entity (Beaumont,. 2010). There are also some benefits which the government will reap for instance there will be overall reduced prices for the products and services in addition to efficiency in service delivery hence the economy is aimed to grow even more. This is because where there is a willing buyer and a willing seller; money will exchange hands therefore, moving the economy forward. This is because chances of inflation occurring in such a market are very low and the government benefits as it will not be forced to solve uncertainties resulting from inflation caused by scarcity of products (Broersma, 2010). Customers will be impacted positively as there is promise of better services such as ability to make calls or send text messages to any of the two networks without any connection charges. Similarly, no extra charges are presented to those communicating across the networks such that it will be cheaper for customers who own tariffs in either of the two mobile networks. The other implication is based on the ability to roam such that the network with the bets signal at any given time is given priority. This means that when a T Mobile user finds that the signal is weak at some point, then they can switch to Orange whose signal may be very strong. Consequently, customers will be able to roam while within the boundaries of the United Kingdom to enjoy the services of either network (Arghire, 2009). However, the negative implications that will be faced by the customers is that the services that entail roaming and network switching are only available to those who possess 2G mobile phones. Therefore, for any existing customer or those wishing to join the new firm, they have to purchase 2G or 3G mobile phones otherwise they will not get to enjoy the benefits that will come with the merger. Other implications include service delivery such that if one of the firms was offering poor services, then this will continue to deteriorate or else it will improve based on the impact of the merger. Therefore, at the end of the entire merging process, customers will end up being satisfied or disgruntled depending on the nature of products as well as how they will be delivered (Daily mail reporter, 2010). Suppliers and creditors who are under the category of stakeholder will also be affected significantly as the fate of the merger is not yet clear up to now. This is because the entire deal has about 18 months to be formalized such that in that period, these stakeholders will be uncertain on the future of their relationship with their former business partners. Similarly, after the deal is sealed, most of the suppliers may be left out based on the preferences of the newcomer while new ones will be contracted. The same case will apply to creditors as the new entity may fail to recognize their business especially with the change of names. This may be devastating especially if the incoming management terminates the contracts already given out to suppliers of the merging partner as there has to be subsequent vetting so as to maintain a regular supply of the services. The suppliers could be part of the outsourcing team and when their services are cancelled, they may tend to lose credibility in the entire mobile phone industry (BBC mobile, 2010). Community members belong to the category of stakeholders who will be affected by the merger especially in terms of corporate social responsibility as the new entity may develop new programs for the same hence terminating projects that had already started. Similarly, the merged firms may enact policies that may negatively affect community members living in areas where the company is located. On the other hand, the policies enacted may be beneficial to community members especially if their issues are addressed adequately (Lloyd, 2010). Employees will be affected by the merger as the two firms with different employee capacities will not be able to handle the same capacity in the new joint entity. Therefore, there has to be downsizing of a good number of the employees while others will be retained though the criterion to be used remains a mystery. Hence until that decision is attained, the uncertainty surrounding the fate of thousands of employees remains unknown. The other impact is on the capacity in which they will be retained by the new firm as different firms have different structural organization such that some positions are present under different names while the responsibilities are the same. Similarly, other roles may be replicated or insignificant hence resulting in redundancy and overall retrenchment of an entire workforce (Arghire, 2009). The other impact of the merger on employees as stakeholders is that the new entity may decide to outsource a greater percentage of human capital and expatriates thus leading to significant loss of jobs. Hiring of new employees who fall under neither firm is common as it is thought that it reduces redundancy as well as ensuring that both parties are responsible for all employees rather than one side blaming the other. Termination of contracts in such a perspective is quite inconveniencing as some of the employees could have embarked on training programs sponsored by their employer or else they could have engaged in other projects funded by their employers. However, upon termination of such employment contracts, a lot tends to fall apart in the employees life. Similarly, potential employees will be reluctant to commit fully or stay for long due to fear of the unknown as the same fate may befall them when a subsequent merger is taking place (Doyle, 2010). Implications for the telecommunications industry The telecommunications industry will be affected tremendously from the merger between T Mobile and Orange in various ways most of which are inclined towards increased service delivery as well as efficiency in communication through the use of mobile phones. Telecommunication is made easier and convenient when the signal is clear such that individuals in various corners are able to communicate without any difficulties. Therefore, the merging of two signals into one will ensure that areas that had previously experienced problems during mobile phone communication are clear. This is attained through integration of already established networks which have already developed their own frequencies (Jowitt, 2010). The other implication of the merger on the telecommunications is on overall improvement in delivery of services. Merging ensures that delivery of products that was initially efficient in one firm is spread to other firms and eventually the entire industry engages the same strategies. Telecommunications industry is very crucial in this era where business deals are closed on the phone without having to leave the comforts of the office. Therefore, enhanced signals results in boosting the growth of the telecommunications industry as the success will be spread out to the entire sector. The successful merger of T Mobile and Orange will also act as an example for any other firms in the telecommunications industry to follow suit in merging as a way of fostering growth in the industry. The example can also be emulated by other sectors hence the telecommunications industry becomes a role model by presenting the most successful merger in terms of attaining the preset goals for each individual company (Broersma, 2010). Consequently, another implication of the merger in the telecommunication industry is that it will boost communication in the country. This is attributed to the fact that citizens of the United Kingdom have been suffering for long in terms of extremely high prices of mobile phones in addition to poor network signals. Therefore, upon merging of the two leading telecommunications firms will lead to customer satisfaction such that the industry will post high levels of achievements in terms of satisfying the needs of a diverse clientele (Pan, 2010). The fact that T Mobile and Orange are leading mobile phone firms in the United Kingdom has been advantageous to the telecommunications industry as it has brought about a lot of focus on the sector. The making of the biggest telecommunication company ‘Everything Everywhere’ has generated a lot of interest in the industry which had been without much activity for a long period of time. Such interest is sufficient to increase the number of investors wishing to engage in businesses present in the telecommunications sector. This is also a sure way to gain experts in the field as well as making it easier for the firms to access international outsourcing services due to the exemplary performance courtesy of the merger (BBC mobile, 2010). Similarly, the telecommunications industry will be faced with the challenge of reduced number of firms as rather than increasing in number they will be reduced. Fewer firms or companies in a sector are attributed to reduced revenue as there will be fewer firms from which taxes are remitted. Hence revenue performance in the entire sector will be compromised therefore resulting in overall poor performance in rating various sectors. The other impact is on competitive capabilities of companies in the sector as investors may analyze the merger as a situation where the clients are unwilling to purchase the products thus resulting in dire looses to firms despite engaging in strategic marketing plans (Lloyd, 2010). Benefits that could be generated from the merger The merger between Orange and T Mobile is bound to generate a lot of benefits for existing customers as well as for the potential customer wishing to switch to their networks. Similarly, other categories of people are going to benefit from the merger though they may not be necessarily customers of the merged firms (Beaumont,. 2010). Customers who have been using T Mobile or Orange networks will be able to make calls or switch between the two networks as they see fit to meet their needs. This way communication channels will be opened up in addition to clarity when making voice calls. Another benefit on the side of the customers is that the charges will be reduced when making calls or sending text messages across the networks as the connection fee has been abolished. The merger will make other rivals in the telecommunications industry to lower the price of their products such that even the merged entity will also lower their prices such that the customers will not have to spend more. Similarly, there will be stiff competition and to remain relevant in the market, firms in the telecommunications industry will have to strategize their marketing which may come in the form of improved quality of products and services hence a benefit to clients (Daily mail reporter, 2010). Consequently, the combined innovative capabilities of the two firms will result in development of better service delivery channels. For instance data communication will be enhanced in addition to improving the existing signals such that the entire client coverage will be able to communicate without hustles in terms of reliability of the networks. The merger is also a timely opportunity to revamp and save an already ailing T Mobile which has been experiencing severe financial problems due to high competition from rivals like Orange. Therefore, the owners of T Mobile have another chance to prove the market worth of T Mobile and its products. This way the reputation of the company will be saved from probable bankruptcy while the entire telecommunications sector will have an added challenge as the other firms have to work harder to compete with the combined effort of the merged entity (Jowitt, 2010). Orange is a member of the MBNL 3G infrastructure trio that is working towards producing 3G mobile phones which will be capable of undertaking the various changes that will make switching much easier. Therefore, T Mobile is bound to gain from the merger as the joint mobiles phones will be sufficient to accommodate the new innovations of ‘Everything Everywhere’ based on improvement of communication in the sector. The other benefit that will be obtained by the two mobile operators is that their combined radio coverage is way larger than that of all the other mobile operators summed up such that the networks will be less congested. Similarly, the combined client base is quite significant therefore, the two merged companies have a larger market share and their sales are projected to increase depending on the marketing strategies the new entity will adopt (Pan, 2010). Managing change for the new management A strategy in managing change for new management may involve carrying out fresh internal recruitment such that employees from both companies reapply for their job positions and the best equipped to contribute to the new entity are retained. The employees who fail to meet the targets set for the merged companies should be relieved of their responsibilities before undertaking the next step. The move will cut down on operational costs as well as ensure that the new firm has the very best who will be productive as well as capable to adapt the new procedures in the entity. The reappointment will produce various results for instance loss of productive previous employees who are uncomfortable with the new entity or loss of co-workers. This may be a stressful time and the new management should be prepared for a wide range of reactions from the affected people (Reh, 2010). The new management of ‘Everything Everywhere’ should allocate sufficient time to interact and brainstorm the next move with the newly hired employees from both sides. This allows them to perceive the employees from each side as assets rather than as liabilities. Such an understanding is adequate as employees contribute a lot in the success of a business enterprise and having them in the decision making process makes them more responsible in their duties. This will also create openness where top management for the new entity will brief the employees of the motive behind the merger so that each side gets to learn from the strengths or weaknesses of each other. This rapport is strategic as the involved departments will be on the forefront towards the attainment of the goals set for the merger (Reh, 2010). The other strategy that may come in handy in reducing the overall tension that occurs when a merger has been effected is through harmonization of various departments as quickly as possible. This will reduce the anxiety present among employees and customers on their fate as a result of the merging. Conclusion In conclusion, the merger of T Mobile and Orange has raised a number of implications of various stakeholders, some of the effects being positive while others are negative. However, the benefits that will be reaped by stakeholders are more than losses such that even the entire telecommunications industry will gain tremendously from the merger. However, in order to achieve these benefits optimally, the new managers have to apply a number of strategies so as to make the change more efficient and productive. Bibliography Arghire, I., 2009, T Mobile UK to merge with Orange UK, Retrieved on April 29, 2011 from: http://news.softpedia.com/news/T-Mobile-UK-to-Merge-with-Orange-UK-121097.shtml BBC mobile, 2010, Orange and T Mobile merge networks, Retrieved on April 29, 2011 From: http://www.bbc.co.uk/news/technology-11199786 Beaumont, C., 2010, T Mobile and Orange merge networks, retrieved on April 29, 2011 from: http://www.telegraph.co.uk/technology/mobile-phones/7986536/Orange-and-T-Mobile-merge-networks.html Broersma, M., 2010, T Mobile and Orange customers register for roaming, Retrieved on April 29, 2011 from: http://www.eweekeurope.co.uk/news/orange-t-mobile-roaming-set-to-begin-9464 Daily mail reporter, 2010, Orange and T Mobile merge networks so that users can switch between them, Retrieved on April 29, 2011 from: http://www.dailymail.co.uk/sciencetech/article-1309852/Orange-T-Mobile-merge-networks-users-switch-them.html Doyle, E., 2010, T Mobile and Orange cut off 1200 jobs, Retrieved on April 29, 2011 from: http://www.eweekeurope.co.uk/news/orange-and-t-mobile-cut-1200-jobs-10284 Jowitt, T., 2010, T Mobile and Orange merge network coverage, Retrieved on April 29, 2011 from: http://www.eweekeurope.co.uk/news/t-mobile-and-orange-merge-network-coverage-10403 Lloyd, I., 2010, cyber law in the United Kingdom, Kluwer Law International: London Pan, H., 2010, telecom mergers & acquisitions monthly newsletter, Information Gatekeepers, Inc: London Reh, K. F., 2010, managing mergers successfully, retrieved on April 29, 2011 from: http://management.about.com/cs/mergersma/a/MergerSuccess.htm Read More