Sprint’s Inflexibility Hindering Growth Essay
Sprint’s Inflexibility Hindering Growth
Continuous and rapid customer growth is what will make a company successful and key to beating any leading competitors. Unfortunately for the Sprint Corporation, the numbers in customer growth are not where they need to be in order to keep up with their main competition, Verizon, AT&T, and T-Mobile. Sprint is quickly losing their old customers faster than they can contract new ones. This lack of growth could be for a number of reasons, but specifically examined are the pricing wars. It isn’t that Sprint is not doing their part in customer satisfaction or keeping up with the changing technology and listening to their customers. Sprint revolutionized the next step in global technology by being the first company to provide 4G to their carriers. So why are they having issues growing their customer base or struggling to even retain the customers they do have?
“Sprint Corporation provides wireless communications services to consumers, businesses, and government users in the United States, Puerto Rico, and the U.S. Virgin Islands” (Sprint Corporation Profile, 2014). These are all considered critical customers to the Sprint Corporation. A critical customer is defined as having “the greatest impact on product design, sales, and future growth opportunities” (Swink et al., 2011, p. 12). It is important that Sprint recognizes that their customers are considered critical customers because they are in a business where the customers shape the product and growth of the company. Having the ‘latest and greatest’ is so important to the materialistic society that is the United States and if a cell phone company cannot keep up with these demands, they will not hold the attention of the customers. “It is important for operations managers to know what product features and delivery terms critical customers consider important, what they are willing to pay, and what they consider acceptable” (Swink et al., 2011, p. 29).
This is where Sprint’s major competitors like AT&T and Verizon are beating them. Price is really the bottom line, which is why the once underdog, T-Mobile is fighting to take Sprints number three position in the cell phone provider rankings. One of Sprint’s current weaknesses is that they are not adjusting to what the critical customer is willing to pay, and it is obvious their clientele does not think the prices are acceptable, hence dropping their Sprint contract and moving to a different company that offers the same coverage, the same products, but for a lower price. This makes Verizon Wireless and AT&T the “order winners” (Swink et al., 2011, 29), that is to say, customers are choosing their offers over Sprint because they offer the lower price. Sprint is a flexible company when it comes to responding to the efficiency to change their product and processes (they are always coming up with new and different data plans and the new “framily plan”) but they are completely inflexible in adapting quickly to the competitive price environment (Swink et al., 33).
Unfortunately, Sprint is far behind its competition and customer growth is suffering. “ Fierce competition in the US operator market led to number three player Sprint reporting a US$1billion loss for the fourth quarter [of 2013] as it experienced the slowest customer growth of the country’s four major carriers” (Handford, 2011 ). They are definitely a strong enough company to retain customers and start growth again; they have the quality products, the nationwide coverage, and the name. However, they are not taking the opportunity to do so. In one quarter, Sprint lost one million contracted customers. Meanwhile, in the same quarter, Verizon wireless added nearly a million customers while AT&T racked in another half million (Brown, 2013). The profitability of Sprint has gone down -8.5% while the top two continue to thrive and do well.
It is safe to say just about everyone in the United States has a cell phone these days. So which provider do you chose? Verizon, AT&T, and Sprint are the top three leading cell phone carriers and all rank in top 100 Fortune 500 companies (“Fortune 500,” 2013). Sprint has its strengths, there is no doubt they are still a successful company, but their weakness lies within their ability to adjust market prices to satisfy and retain their current customers as well as bring in new clientele. If they have any hopes of beating out Verizon Wireless and AT&T and keep T-Mobile off their heels, they will need to adjust their operation management, reevaluate their systems and what they think is important versus what their customers think is important. If the customer does not think they are getting the best deal they can, they move on. Sprint cannot afford to continue the one million customer decrease per quarter and hope to remain in the business much longer.
Sprint needs to become more flexible and more focused on matching prices than on anything else at the present time. Price matching is what is hurting the company. Although they are adapting quite well to the changing technology and keeping up with data coverage and especially the leader in 4G LTE, it is not enough. Sprint needs to become more flexible and more focused on matching prices than on anything else at the present time. Price matching is what is hurting the company. Although they are adapting quite well to the changing technology and keeping up with data coverage and especially the leader in 4G LTE, it is not enough.
Of course if they were to fall behind in one of these other factions, they would suffer even further. Good data and the newest gadgets are expected by customers. The price matching is what is going to continue to harm the company. Sprint needs to take the opportunity to reevaluate their operations and get on track with the other three major cell phone providers (Verizon Wireless, AT&T, and T-Mobile). There was talk of Sprint putting in an offer to merge with T-Mobile and absorb them as they previously did with Nexus. Though that did not work out well with Nexus, it could be beneficial for this merger to take place, for both companies. Both are almost neck and neck with each other, and this could be the push they need to attempt to beat out the big top two.
Brown, A. (2013, JULY 13). Sprint’s problems, brought into new clarity. Retrieved from http://www.forbes.com/sites/abrambrown/2013/07/30/sprints-problems-brought-into-new-clearity-fall-to-billionaire-led-softbank-to-solve/ Fortune 500. (2013). Retrieved from http://money.cnn.com/magazines/fortune/fortune500/2011/full_list/ Handford, R. (2014, February 11). Sprint reports $1b loss as growth suffers. Retrieved from