Sprint Strategic Audit - Term Paper Example

? Sprint Strategic Audit Number: Sprint Nextel corporation was founded in 1899 in Abilene Kansas. It is the United s’third largest telecommunication corporation. It employs more than 50, 000 staff, and its market capitalization is more than $67 billion. It provides communication products to the consumers, private sector and public sector. It runs its business in two segments: wireless and wireline. It serves the wireless market segment with data services including messages, emails, and internet services. It also sells hands-free devices, carrying cases, and batteries. On the other hand, the wireline segment offers voice services including domestic and international voice services. The company’s important recent history is its merging with Nextel. The merger was completed in 2005. At the time of the merger, Nextel was number five telecommunication provider in United States. Directional, portfolio analysis, and parenting The corporate strategy of the company involves three key elements. The first one is directional strategy, which deals with the company’s orientation in terms of growth and stability. The second one is portfolio strategy, which covers the markets in which Sprint Nextel competes with its business units; and lastly parenting strategy showing how the company’s leadership coordinates its operations and develops its products lines, as well as, business units ( Hunger & Wheelen, 2007). The Nextel deal resulted to Sprint losing $29 billion in 2007. However, the new chief executive officer, Dan Hesse, who assumed leadership in December 2007, has worked hard to turn around the company. When he took over the executive role, the company’s shares were performing poorly compared with other companies’ share operating in the telecommunication industry. In 2012, the company’s shares are up at around 122%, performing better than Apple and Google’s shares. They are second after the best performing shares, PulteGroup. According to the company’s chief executive, the past four years were the company’s recovery stage. During this period, the company retrenched a third of its employees, as well as, and shut down operations in Nextel system since they were not compatible with Sprint’s network. According to the company’s leadership, the next two to three years are investment stage, which are meant to return the company back to profitability. The company is expected to reach the growth stage and profitability in 3014 following prudent investment strategies. Even if, the company would reach growth it would be after suffering more than $50 billion losses including its write-down of Nextel, which cost it, more than $30 billion, in addition to other annual losses. As part of the growth strategy, the company invested more than $3 billion in WiMAX broadband technology, in 2008. The investment in the new technology resulted to an increase in demand for the company’s wireless internet services. The company also collaborated with Samsung Electronics in the project. Additionally, the company formed a joint venture with cable television operators to provide TV, Cable, wireless phone and home phone in 1 package. To diversify its portfolio the company has a 49 percent stock in Virginia Mobile United States, as well as, 50 percent stake in Virginia Mobile Telecoms. This year the company has announced that, it will start serving eleven new cities and countries with its speed and power of its 4G network. This will enable customers in these regions to use their Smartphone, to share pictures, and other files using high-speed internet connectivity. Additionally, as part of efforts to grow its market share, the company unveiled Sprit Velocity, a capability meant of enhancing development and integration of motor vehicles communication systems. The tool is designed to meet its customer’s needs by enhancing communication between the drivers and passengers. Though the company has been making billions in loses over the last a couple of quarters, the laid down growth and diversification strategies are meant to drive the company into making profits in the near future (Hunger, 2007). Business strategy The company operations are carried out in two business segments including wireless and wireline segments. The wireless segment’s revenues come from both retail and wholesale through transferring data and selling of wireless devices, as well as, accessories. On the other hand, wireline’s revenue comes from both national and international voice communications services The company was the first to invest in 4G network, in the United States. Despite this, competition in the wireless services market is stiff in the country because wireless penetration is more than percent. According to the management, the company will invest heavily for its network upgrading, as well as, upgrading its 4G needs. Additionally, the company signed a three years $1.6 billion network sharing agreement with Clearwire. The company also uses Clearwire’s unlimited 4G network, which it paid for $ 350 million. The company’s WiMAX spectrum gives the company a competitive advantage since its competitors have an entry barrier in this area. The company acquired 80 percent of the spectrum, after acquiring Nextel. The company has patented the spectrum, which prevent other company’s from infringing its rights without its consent. The unique position has boosted the company’s revenue since the merging deal. Over the last half a decade, the company has invested a lot in network upgrading. In its recent network modernization plan, the company forecasts to generate more than $10 billion in cost savings over the next six years. Additionally, the strategy is expected to increase the company’s profitability. As a strategy to increase its revenue in the wireless business segment, the company sells a wide range of smartphones including Android, hotspots, 4G, tablets, and routers. By selling blackberries and Samsung products, the company has also increased its revenue. As a strategy to reinvent its wireline business services, the company is expanding its capabilities of its cities and countries’ IP/MPLS network. This is meant to enable business customers to migrate from legacy ATM to IP. In addition, it is meant to allow wholesale customers to integrate wireless and wireline services effectively though new services, for example, Wholesale Mobile Integration. All these business strategies are meant to enable the company acquire a competitive advantage. The company has taken advantage of the ever-changing technology to tailor-make its products to meet its customers’ needs. The telecommunication industry is extremely competitive, and businesses must acquire a competitive advantage to survive. The company has grown its customer base through enhanced customer satisfaction, which is a good foundation for future growth and profitability. Although over the last a couple of years the company has been making losses, it is expected that it will turn into a profitable business by 2014 (Nextel, 2011). Sprint Nextel Corporation operating in two business segments is a way of diversification. The company also sells accessories to boost its revenue. A diversified corporation is always able to survive during hard economic times since its segments supplement each other. Additionally, the company’s business segments serve a wide range of customers including businesses, private sector, and public sector. This is also a way of diversification, which boosts the company’s revenue through an increased market share. The company has designed its products uniquely for each market segment to enhance customer satisfaction. This is one of the major reasons why its customer base has grown rapidly; over the last half a decade. The customer base is expected to grow even more in the next one decade as the company continues to incorporate technology into almost all other industries, for example, auto industry. Functional strategy Functional strategy is a systematic plan of decision-making in each functional area of a firm’s operations. The functional areas refer to a firm’s departments that include the finance, production, human resource, operations, research and development, investment and marketing. Therefore, functional strategy is the techniques and procedure adopted by a firm to ensure that they make decisions that will ensure that the functional areas are able to attain the optimum success of their goals. The functional strategy, therefore, touches and determines the success of functional areas strategies for example the production strategy, finance strategy and organization strategy. Organization strategy relates to a firm’s systematic techniques of ensuring optimization of their workforce through different ways of motivation. Production strategy is the technique of optimizing the firm’s production capacity. Sprint Nextel planned on strategies of how to improve its productivity and that of their employees. They, therefore, embarked on relocating the employees to a new state of the art building. The firm moved their employees to the new Sprint Mobile Zones at Sprint’s Overland park, which has new working space, new technology and new furniture and went further to even change the workplace policies. Sprint Nextel strategy was to increase its production capacity, improve labor productivity, increase mobility but also cut cost of operation. By the end of the implementation of this strategy, the firm reported a 30% increase in productivity estimated to be $4.4 million in revenue (Godiwall 1990). Sprint Nextel made plans to add its leadership position by strategizing on key growth areas of data services and mobility. The strategy was meant to reposition Sprint Nextel and have an autonomous firm for data services and mobility. The firm launched a new firm EMBARQ as an independent company to enable the firm to develop a leadership position in the fast changing mobile industry. Since the strategy the firm the firm reported an increase in revenue and according to the firm, 94% of its revenue came from wireless segment. Sprint Nextel has product strategies to ensure that their products are the best in the telecommunication market. Sprint Nextel has vast and unique leading product portfolio, competitive differentiators, advanced wireless application and IP networks. Sprint Nextel offers an all inclusive communication services to its customers. They have developed innovative technologies, which includes a global wireless network that offers leading mobile data services. Sprint Nextel provides the leading high-speed internet to mobile phone users. Due to this the firm strategized on a diversification plan for their highly demanded products. The firm partnered with the leading mobile manufacturers such as Nokia, Samsung and LG to provide them with their products in their mobile phone. This strategy has put Sprint Nextel in the lead, in the wireless segment, when compared to the other leading companies. Sprint Nextel has planned to expand its push-to-talk and Nextel direct connect. This service enables a customer to connect with another using the same concept as that of dispatcher radio. It is similar to how the radios used by the police operate. This will target to capture the market of industries such as the construction that need such services to spread their workers. The application uses special cellular network with its own network and frequencies. It makes direct connection possible between two Nextel users and only uses only one frequency. This strategy will increase the firm’s investments in technology, and this will increase its portfolio of investment and diversify the firm’s investments thus spreading its risks. Marketing Strategy In 2011, Sprint Nextel Corporation and National Basketball Association entered into a more than three years marketing partnership meant to make the company the NBA wireless telecommunication services partner. The partnership was expected to enable Sprint reach the large NBA fan base through television exposure and basketball tournament events. The partnership facilitated the development of a customized application known as Sprint NBA Mobile the most innovative application in the market for MBA fans. The application enables the NBA fan to access live basketball matches, in addition to receiving games highlights, and game statistics including scores. The application is supported by android phones and is exclusively available to only Sprint customers. It also has unlimited data access. Both Sprint and NBA benefit from the partnership. The NBA fans lives a mobile lifestyle and, therefore, the application enables them to watch the game from any place at any time. In other words, the fans enjoy an unlimited access to NBA events and news. The company benefits from marketing its products and services, as well as, increased revenue from the sale of the applications. Through conducting a primary market research, the company realized that its customers had a hard time locating and navigating it stores. They also were not fully aware of what the company offered. The stores were designed in a manner that favored young male customers and did not accommodate the differences of men and women shopping styles. The company discovered a new market for their goods including women at their late 30s since they have a high average income. After identifying the new market segment, the company reinvented its stores to meet its customers’ shopping needs. The company’s new stores are created in a more attractive nature and are in a strategic position, and easy to navigate. The new stores organize the products in form easing navigation, as well as, enabling customers to navigate and to compare items. The company has invested in new innovative display tools that enable the company to market its services and accessories including new phones. The advertisement through billboards communicates brand messages effectively creating an emotional connection between the environment and customers. After reinvention of the company’s stores, the store managers have given feedback on sales growth, which shows the importance of market research. By 2010 even after merging, the two companies were not operating as one company. Customer complaints were growing day by day. Nextel side of business had the most complaints because of ineffective communication of the company’s products and services to customers. Sprint has now developed its website concentrating more on marketing its products, sensitizing its customers on what are its products and services, and how unique they are compared to others. Additionally, the company has also signed a $700 million marketing deal with NASCAR. The number two most watched sport in United States is a rapidly growing market for businesses advertisers, outdoing both National Football League and Major League Baseball combined. To grow its customer base further, the company should invest more in advertisements especially in social media including Facebook and Twitter. This would increase its target customer coverage since most of them use the social media. Customer Scoreboard Objectives A customers’ scoreboard is tool used for measuring customer satisfaction. It indicates how the customers value a given firm’s products or services. The research officials request customers of their product to give feedback on their views about a given product. Sprint Nextel has an objective of ensuring that they learn more about their customers, what they want how they want it and how the firm will serve them well. This objective is for enabling the firm to maintain the changing needs of their customers. The firm has been able to provide services that coincide with the current markets needs. Learning more about the customers means that Sprint Nextel employees interact with the customers thus enhancing good relationship between the firm and the customers. This interaction is good for the business because when the customers feel appreciated they will come back. Therefore, the firm has set objectives on its customer scoreboard to ensure that the scoreboard gathers well-documented information on the customer’s views (Britain 2005). Sprint Nextel customers’ scoreboard is used to provide guidelines to the management as they plan and strategize on products and marketing strategies. Therefore, the firm’s scoreboard has the objective of ensuring that it gives recommendations about its finding on the customers. The scoreboard is thus required to give recommendations on what the officials delegated with the work of gathering information found out. The information is to add on to the specific reactions and facial expression the customers gave that the other general note did not capture. This assists the management in coming up with effective decisions relating to the marketing and product of the firm. The scorecard is like a learning perspective of the firm. The firm ideas and innovations are passed through the test of customers and the firm thus gets to know how the customers valued their ideas. It enables the firm to know if it can continue to create and improve value. A series of the scorecards and the decision passed thereafter can also show the how a firm learns and grows. Sprint Nextel deals with a very volatile market of technology and cell phones. The market changes constantly and thus the firm need to match the pace of the changing needs of the telecommunication market. The scorecard provides management with prompt and complete information on the customers’ expectations. This thus enables the firm to keep up with the changing world (Anderson 1994). Customer scorecards provide the firm with information about the unexploited markets. Effective scoreboard will, therefore, give the firm fast information on unexploited thus enabling the firm to act first in exploring about the market and thus deciding on investing or not before the other competitor realize about that opportunity. Sprint Nextel has diversified its business to the mobile industry. Mobile phone industry has been experiencing an increase in the usage of mobile phone as browsing appliances. The increase means many people are using the mobile phones using Sprint Nextel ser of applications inventions over the years. The scoreboard thus has the objective services. Customer scorecards thus have to find credible information about the performance of Sprint Nextel services in Samsung, Nokia and LG mobile appliances. References Ackerann, F. (2011). Managerial processes: an operations management perspective towards dynamic capabilities. Fran Ackermann, 157-173. Anderson, E. (1994). Customer satisfaction, market share, and profitability. Journal of Marketing, 53-66. Britain, G. (2005). Strategic audit : progress and challenges for the UK. London : Strategy Unit. Dixon, A. (n.d.). Business strategy. New Zealand Institute of Chartered Accountants: Wellington, N.Z. Godiwall, Y. (1990). Corporate strategy and functional management. Praege: New York . Heany, D. (1900). PIMS planning guide : making a strategic audit. Cambridge: Strategic Planning Institute. Helpman, E. (2008). Institutions and Economic Performance. Cambridge: Harvard University Press. Hunger, D., & Wheelen, T. (2007). Essentials of strategic management. 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