Hr Restruction At Lucent Technologies

HR RESTRUCTION AT LUCENT TECHNOLOGIES

VIVEK ROY MITESH PATEL KAILASH YEVALE AMARNATH TATHAGATA PRANAY GUPTA VAIBHAV VAISHNAV VINIT JAISWAL RAJESH CHENNA

CASE STUDY ANALYSIS DONE BY:

COMPANY PROFILE

• LUCENT technologies was a technology company composed of what was formerly AT&T Technologies, which included Western Electric and Bell Labs. It was spun off from AT&T on September 30, 1996. lucent merged with Alkatel SA of France to form ALKATEL-LUCENT on December 1, 2006.

• At the time of its spinoff Lucent ws placed under leadership of Henry Schacht , who was brought in to oversee its transition from an arm of AT&T into into an independent corporation . Richard Mc Ginn succeeded Schacht as CEO in 1997.

Contd………….

Lucent became a darling of stock market in late 1990s rising from split adjusted spinoff price of $7 per share to $84/share.

However on January ,6 , 2000 lucent made first of a string of announcements that it had missed its quarterly estimates and later it was revealed that it had used dubious accounting practices to generate some of its early quarterly numbers. By October 2002 , when its stock price bottomed at 55 cents per share Henry Schacht had been brought back on an interim basis to replace Mc Ginn.

Contd………

In 2002, lucent began making significant cuts to the healthcare and retirement benefitsof many of its 125000 retires. Although lucent contends these and future cuts are necessary for its survival, they have neverthless spawned several lawsuits and generated a continuing flow of negative publicity in media. Tpday lucent has 30500 employees, down from about 165000 employees at its zenith.

Contd……..

Lucent is active in areas of telephone switching , optical ,data, and wireless networking.

On April 2, 2006 lucent announced a merger agreement with Alkatel, which is 1.5 times the size of lucent . Ms Russo served as CEO of newly mergered company, Alkatel-Lucent, until she was ousted in 2008.

CASE SUMMARY

• Lucent technologies was an entity that spun off from Teleco giant AT&T.

• Lucent became a major player in many businesses viz mobility, data, OPTICAL, AND VOICE NETWORKING TECHNOLOGIES, professional network designs and consulting services, web based enterprises, solutions that linked public and private networks and optoelectronics and semiconductors, .

Contd…….

• In 1996 due to growing popularity of internet there was huge demand for more than one product line which boosted Lucent’s sales.(talk about capture of market of nortel and moto. etc)

• However in late 1990s data traffic business started to grow rapidly but Lucent didn’t recognise this and continued with its main competencies ie telecom equipment and voice based technologies. Whereas Nortel and Cisco recognized the potential of internet and invested aggressively in data traffic business.

Contd….• Though lucent invested in few internet and wireless

companies after 1996 but their focus was still on their core competencies.

• In 1999 lucent decided to restructure its opertions by dividing themselves into 4 key businesses – service providers networks, net core professional services , enterprise networks and microelectronics and communication technologies.

• By late 1999 lucent was in great trouble as their high priced acquisitions were not earning profits and company was unable to integrate operations of acquired companies leading to problems on corporate culture front.

Contd……

• In early 2000 lucent took many initiatives to increase its resources and reduce capital expenditures to improve cash flow from operations . however just when lucent had increased its sales to start internet and phone companies many of them defaulted on payments as technology and telecom industry reeled under an unprecented slump in 2000 which took lucent into a deep financial crisis.

• Analysts attributed lucent’s bad performance to wrong strategies and wrong use of funds by company’s CEO Mc Ginn hence he was replaced by Schacht as temporary CEO.

• In early 2001 lucent announced a 7 pt restructuring plan to revive co. from bankruptcy…………

CHALLENGES FACED!!!!!!!!!!

• Credit crunch in 2000 due to low sales high inventory and more credit sales worsened the situation.

• Mismatch between its own organizational culture and culture of organizations it acquired which led to exodus of many good employees….

• Slump of telecom sector in 2000.

SWOT ANALYSIS

STRENGTHS:

• Expansion activities were carried out very well . whenever they found Scope for acquisition or merger they did.

• Like acquisition of Octel Communicatins corp.(1997), Livington enterprises(1997), prominent corp(1998), ascend communi=cation(1999), Chromatis network(2000). 

Contd……….

WEAKN ESS• Management of lucent was ignorant for past 2yrs as it

failed to realize that the sales of the company are declining but production was going as per schedule and they were also ignorant regarding more credit sales than cash sales. Thus these factors led to a credit crunch.

• Before acquiring the companies lucent didn’t investigate properly the true value of those organizations. As according to many analysts lucent paid much high price 4 those acquistions. .

Contd…………• Secondly management of lucent was ignorant

towards the fact that the organization they are acquiring are in their maturity stages and had no cutting edge technologies in their pipeline.

• Another ignorance of marketing dept. of lucent comes from the fact that from early 1990s internal and wireless systems began growing and many of the competitors like Cisco and Nortel were investing in these technology but lucent didn’t realise that in time and by the time it realized it had already lost a huge chunk of market share

Contd………

• The biggest of the weakness of lucent was its inability to integrate the culture of acquired companies with its own company which led to restructuring in human resource.

ACTIONS TAKEN• GROWS(HAS TO BE READ FRM BOOK).• SDPT(“)• TIGER TEAM(“)• PMO(“)• GLOBAL ORGANISATIONAL

STRUCTURE(PARAMETERS PG 227 4TH PARA)

Contd……….

• BLUE PRINT OF HR OPERATIONS ACROSS LUCENT BUSINESS.(HAS TO BE XPLAINED.)

• FOCUS ON I.T.• PROMOTED SELF HELP AND WEB ENABLING

RESULTSThe actions taken by lucent technologies gave positive

results to them .since years 2001 an d2002 were bad fro all telecom companies due to adverse market conditions hence lucent reported huge losses of over us$ 14.17 and us$ 11.82bn for yrs 2001 and 2002 from profits of more than us $1.43 in 2000. According to reports lucent not only met its cost reduction targets of us$2bn per yr. but also exceeded its targets . Hence in fiscal year 2003 lucent reported a net income of us$99mn for the fourth quarter ending sept 30 as compared to loss of us$2.81bn for same period in 2003. Following this lucent stock price increased from us$.76 in sept 2002 to us$2.16 in sept 2003