For nearly a decade since its forced divestiture, AT&T has been lighting to maintain market share and profitability in the telecommunications industry. In some cases, the quality of services offered by AT&T appears to be falling. Con¬ sider, for example, these facts.

■ The company’s market share of the corporate long distance market is esti¬ mated to have fallen from 80% in 1989 to 55% in 1993.

■ AT&T’s long distance network, after operating reliably for many decades, has failed four times in the past few years. One outage closed down air traffic control on the east coast and interrupted transaction processing on Wall Street. Three of the four failures were blamed on worker and management carelessness.

Some attribute AT&T’s failures to its efforts to down-size and become more efficient and more profitable. Critics claim the down-sizing is affecting not only the firm’s costs but the quality of its services. As a result of the cost cutting, the company has been slow in responding to customer service needs and has resorted to the use of independent contractors in some customer servicing roles.

Ethics and Quality Discussion

[SOURCE: Adapted from John J. Keller, “Some AT&T Clients Gripe 1 hat Cost (hits Are Hurting Service,” Wall Street Journal (January 24, 1992), pp. Al, A4. Reprinted by permission ol The Wall Street Journal, © 1992 Dow Jones & Company, Inc. All Rights Reserved Worldwide.]

804 PART V Cost Control

a. How would production control (or service control) at AT&T differ from production control in a typical factory?

b. In trying to improve the efficiency of its operations, is it possible that AT&T has lowered the quality of its operations? Explain.

c. Could the downsizing and cost cutting at AT&T create an endless downward spiral? Explain.

d. How could AT&T adopt a JIT service approach to improve its response time and the quality of its efforts in servicing its customers?