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Sprint finally posted some reasonably good results recently. However, these could not mask the fact that the No. 3 wireless carrier is too small to ever gain any ground on AT&T Inc. (NYSE: T) and Verizon Wireless (VZ). Sprint’s revenue rose rapidly from 2002 to 2006. Over the period, sales moved from $15.2 billion to $41 billion, aided by the buyout of Nextel at the end of 2004. Sprint paid $35 billion for Nextel, and the decision turned out to be a disaster. The Sprint network ran on a different platform from Nextel’s. Customers left the combined company. Sprint made the MSN “Customer Service Hall of Shame” several times, most recently in 2010. Sprint’s customer service ratings have improved significantly since then, but the damage has been done. While AT&T and Verizon Wireless have grown rapidly, Sprint’s revenue has fallen from $41.1 billion in 2007 to $33.7 billion last year. Sprint’s cumulative loss during that period was over $43 billion. Sprint now has about 50 million subscribers to Verizon’s 104 million and AT&T’s 95 million. As a Morningstar researcher recently noted, “While Sprint has struggled, Verizon Wireless and AT&T have benefited at its expense. Fending off these much larger rivals will be increasingly difficult as data services become more important to the industry.”

Q1: Which component(s) of the general environment contributed most to Sprint’s struggle? Explain.

Q2: Which components of the specific/industry environment contributed most to Sprint’s struggle? Explain.