Black Berry Case Study PDF

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Professor Scorsone MGMT 439 12 April 2015 Blackberry Case Study Describe the most important events that led to RIM’s extraordinary rise to one of the most valuable tech companies. Describe RIM’s business model, vision, and at least 3 strategic actions they employed to implement their business model....

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Professor Scorsone MGMT 439 12 April 2015 Blackberry Case Study

1. Describe the most important events that led to RIM’s extraordinary rise to one of the most valuable tech companies. Describe RIM’s business model, vision, and at least 3 strategic actions they employed to implement their business model. The events that helped shape RIM’s success in the smartphone industry started with, however subtle it may seem, the initial innovation of Mike Lazaridis and Gary Mouseeau behind the “two-mailbox problem.” This simple problem led them to create a product that met that need within the industry (previously untouched) and marked the start of their rise. The next important event was the release of the BlackBerry Pearl in 2006. This “candy bar” style phone with features such as a camera and video playing was the first time BlackBerry expanded to a new user-base, individual consumers. The last of these events is an amalgamation of the global marketing efforts RIM performed: the Fast 100 (responsible for prepping carriers for launch), Jamaica/Trinidad henna tattoo gimmick, RIM Rocks concert, etc. These events all helped bolster the RIM brand and BlackBerry technology across the world.  RIM’s business model (segmented): o Customer Segments – Corporate customers; however, they also appealed to both retail and individual customers. o Value Propositions – Security, push technology (email), professional applications, business “on-the-go” o Customer Relationship – Corporate conferences, Phone support, knowledge base, social media. o Channels – Mobile phone retailers, electronic retailers, and online resellers. o Revenue Streams – BlackBerry phones, accessories, software, subscription-based for push email service, and applications o Key Activities – Sales, product development, R&D, marketing, customer support, and security development. o Key Resources – Professional image, technological prowess, engineers, and R&D. o Key Partners – Phone operators, developers, manufacturers, suppliers, and investors. o Cost Structures – Raw materials, R&D, employees, maintenance, and communication In order to implement this model, RIM implemented the following key strategic actions: creating desktop redirectors (forwarded messages and data to and from mobile devices) and seeding it with a large list of CEOs and CTOs, drawing on talent from globally recognized computer science/engineering University of Waterloo, and pairing up with large companies such as AOL and Time Warner. With these specific actions, BlackBerry focused on its key demographic (corporate consumers), was able to create products that had all of its values e.g. security from some of the best minds in the world, and was able to invest capital made from partnerships into key operations. RIM’s vision: “to provide solutions for the worldwide mobile communications market, including the software that allows the BlackBerry Smartphone to provide mobile access to email, applications, media and the Internet."

2. Do some research on the Smartphones industry. Prepare a Porter’s 5 Forces Analysis for the Smartphones industry. See a list of examples below. To get started, place the sample statements in the appropriate Force category and complete your analysis by adding a few more statements. Smartphone Industry Threat of New Entry (Low)

Power of Buyers Customer switching costs are minimal A large pool of suppliers Low dependcy on the distrubutors of smartphones

Specialist knowledge Large capital requirement Brand loyalty Technology patents required Large distribution network required

Rivalry Among Competitors Large and growing market Products are perishable Industry is fast-paced OS developement Similarites in smartphones create price-wars

Threat of Substitute Products Many individual buyers Buyers are not concentrated Similarities in smartphone functions and features App market allows for non-smartphone devices to use similar functions e.g. texting Internet-based calls e.g. Skype do not require smartphones

Power of Suppliers Large number of raw inputs required Vertical integration difficult

3. Using Porter’s Five Forces as a starting point, describe the most important actions and events that led to RIM’s extraordinary fall. Include at least 3 key strategic misfires. RIM’s downfall from its superior positioning within the smartphone industry can be attributed to a variety of factors. Applying Porter’s Five Forces framework, the first of RIM’s “strategic misfires” comes from the category regarding the threat of new entry. RIM failed to predict and effectively counter the competition; whereby, incumbents such as Apple (iPhone) were able to successfully penetrate and capitalize in the market. This lack of foresight into what was (at the time) superior technology coupled with its complacency with its market position, led RIM to do little about the new competition, ultimately allowing these companies to grab a footing in the industry and capture large portions of market share. This very concept is illustrated by the company’s distinct lack of marketing, even in the wake of this competition, which led into their next key issue of failing to understand the market. RIM’s combination of a lack of marketing and poor R&D department meant they were not privy to the market demand (what “strong” buyers wanted). This was demonstrated by the company releasing a flip phone-styled BlackBerry, even when research dictated that consumers wanted candy-styled phones. The last strategic faux pas, arguably their biggest one, was a lack of focus on their market niche. RIM started off as a company who provided products to the corporate environment and became lost in the sensationalism of the individual consumer world. They lost their differentiation within the industry when they began focusing on the individual and not what their primary business strategy was; subsequently losing corporate consumers and their competitive advantage in the smartphone industry.

Lack of marketing (if followed it was incorrect candy instead of flip but make flip anyway), zero r&d, too much management (5-10% engineering, lack of celebrity appeal (bieber) didn’t keep up with times, blackberry couldn't compete with iphone internet) BOLD 9000, Strategic Misfires -

4. Do you agree with Jeff Gadway’s concluding remarks to the BW article? Should the revised strategy include the focus group perceptions? Jeff Gadway’s closing statement regarding Blackberry’s future potential is not one without merit. Simply put, Blackberry was a revolutionary brand. It marked the first of many industry standards (e.g. secure mobile email clients) practiced by most, if not all, smartphone producers. Paired with their previous successful smartphones, upon initiating these industry standards, BlackBerry became a brand that everyone knew and idolized. Their declining position within the market was a direct result of poor decision-making by upper management (e.g. limited marketing) and success-driven complacency within the industry. The smartphone industry is defined by its rapidly evolving and evergrowing nature, with consumers at the forefront. Their tastes, preferences, likes, and dislikes all decide what devices will succeed in the market and what devices will not. That is why brand loyalty is a critical factor in maintaining a market position. Apple, while dominating the smartphone industry with nearly 93%, could just easily fall victim to its own trend-setting behaviour and quickly become obsolete within the smartphone market, as BlackBerry proved possible (ibtimes citation). However, because of their diversified product line: the MacBook, iTunes, or more recently the iWatch, Apple has accumulated a large user-base from multiple industries, creating an ecosystem with its products that its users have become dependent on. This is precisely why BlackBerry should consider focus group perceptions in its revised strategy. As aforementioned, consumers are an integral part of the industry. These suggestions were one of several problems that troubled BlackBerry. BlackBerry simply did not listen. Taking their suggestions should, in theory, only prove advantageous to BlackBerry.

5. Do some research on John Chen, CEO, and state his strategy for RIM (now BlackBerry), as it is being currently crafted and executed. Considering your analysis of the Rise and Fall of BlackBerry, the new CEO’s vision and strategy, and what you are learning in Applied Strategy, “what are the strategic challenges for RIM going forward?” Include at least 3 strategy initiatives to meet those challenges. Is the strategy working? Will Blackberry rise again? Explain. The strategy being implemented by BlackBerry CEO, John Chen is one that is focusing solely on the long-term success for the company, ignoring all the excitement short-lived trends are currently generating. This starts with the

company stepping away from the consumer market and concentrating exclusively on enterprises, an area BlackBerry is familiar and strong within. The company’s strategy will focus on four main structures:  Devices - Chen plans to partner with manufacturer Foxconn and producer Samsung, focusing on the markets in developing countries.  Enterprise software – Produce software specific to organizational security and productivity.  QNX Embedded business – Develop QNX to expand machine-to-machine communication beyond the automobile industry.  BlackBerry Messenger – Integrate its multiplatform messenger into aforementioned areas In its current state, the revised strategy still faces numerous challenges in each of the four areas it focuses on. The [developing] markets BlackBerry plans on pursuing for its devices, if successful, will yield low profit margins. To compensate for this, BlackBerry will need to closely manage its operations e.g. consistently monitoring each point in its supply chain, phasing out any inefficiency and unnecessary costs. The enterprise software faces an issue of a declining customer base specifically, corporate clients. In order to retain its already existing customers and attract new ones, BlackBerry plans on initially focusing on regulatory entities where security is critical such as: banks, government agencies, or healthcare facilities. QNX and BlackBerry Messenger both face a similar problem, monetization. BlackBerry generates very little profit from QNX and has yet to monetize its messenger. Partnerships with Google and Apple devices has can lead to potential revenue for its messenger as well as charging one-time fee or through subscription-based service. Increasing QNX revenue will require BlackBerry to find various new outlets for its application, while continuing its implementation in the automobile industry. These changes, however, may not be enough to bring BlackBerry back. BlackBerry reported a loss last year of approximately $304 million on revenue of $3.3 billion (nyt citation). Revenues dropped from $793 million in Q3 to $660 in Q4, which implies the device area of the business has yet to recover. However, they are also reporting their software area has seen an increase from 20% last year to 24%. At this point, it would appear that the revised strategy has seen marginal success in some areas, but not all. If the previous data is in any way indicative of the future, I cannot see BlackBerry lasting, let alone flourishing. The company is, most likely, too damaged to salvage. The brand itself has become antiquated in the minds of consumers and no amount of strategy revision can change that. This has also help perpetuate the very problem they have been trying to solve. As more and more people begin to abandon BlackBerry, the general consensus for others has become to follow suit. Regardless of what little success they have in certain areas i.e. software, decline in other areas such as smartphones will undoubtedly lead to an erosion of the BlackBerry brand....