The failure of Blackberry to develop an ecosystem of stakeholders-2 PDF

Preview

Summary

Essay...

Description

MGT3334 Strategic Management Significance of Stakeholders 2020

Adapted from ©Hitt, Ireland, Hoskisson (2017), Boston, MA: Cengage

In 2007 the Apple iPhone was introduced as a consumer product which became known as the smartphone. At the time, the dominant player in this category was Research in Motion (RIM), later known as Blackberry. As late as 2010, Blackberry held 43% of the commercial and government communication sectors. As consumers, including the business and governments segments, found the smartphone to be superior as far as utility, Blackberry’s market share began to decrease precipitously. Although Blackberry’s technology allowed it to be a superior communication device for email and phone, the iPhone was superior as a handheld computer device, including communications and messaging, with much more versatility. Blackberry’s demise provides an informed example of how the competitive landscape has changed in regard to successful business model implementation. Previously, having a good product or service and well run cost-effective company with sound capital structure was sufficient. With newer business models, having an effective strategy to manage the ecosystem or network of suppliers and customers has become more salient. Because Blackberry had remarkably loyal customers and a strong product, it failed to recognise the importance of Apple’s ecosystem innovation, which allowed it to expand and diversify its range of applications or its handheld computer (smartphone). In particular, complementors to the industry were key. The innovation for Apple was its ecosystem of app developers. Apple not only focused on the value chain of making the iPhone and iPad, but it also focused on managing the ecosystem of creating valuable apps. As a result, an army of

software developers committed to producing iPhone applications, was behind the development of Apple’s device for the general consumer and for business professionals. They created a network of stakeholders and facilitated a way to make it easy to install apps on the phone. App developers responded in huge numbers. When the app store was launched in 2008, there were 500. Within a year there were 55,000 apps and over a billion downloads. This was the significant difference between the small development community focused on Blackberry and the massive development community that arose applications for the iPhone. Similarly, the “open” system approach used by Google in fostering the Android system allowed a competitive ecosystem to develop that rivalled the iPhone. Even now Blackberry has not been able to create the type of stakeholder ecosystem comparable to those of Apple and Google. Since 2010 Blackberry has had two new CEOs and, although there are improvements, the firm has never recovered. Blackberry has tried to focus on the business and government sectors using its classic look with physical keyboard, however, it still had a 34% drop in revenue in the fourth quarter of 2014. The reviews of its latest product, the Blackberry Classic, note that although consumers are likely to appreciate the retro feel of the device because of the perfected physical keyboard and mouse-like track pad, preloaded apps were slow and poorly designed. The app situation is problematic because Blackberry doesn’t have the number of app developers of the Apple of Google ecosystems. Many of the apps that you do find are difficult to download and often do not resize to fit the Classic’s square screen well. As such you get a real physical keyboard to help with emails, manage your calendar, and browse the web, but few other good software applications. Although the Classic is the best model ever released, it is expected that Blackberry will continue to decline due to the lack of quality apps such as the ones found in its competitor’s ecosystems. Apple was able to outsource innovation to more developers than it could afford to employ thereby ensuring a steady stream of desirable new applications and content. Transparent revenue sharing for these developers and a few early app millionaires created incentive at negligible expense. On the other hand, Blackberry restricted its development community and could not hope to innovate fast enough to compete with the iPhone’s positive feedback loop accruing value to customers, innovators, and 2

content providers, resulting in profitable market share which drew capital market players as well. In summary, Blackberry’s big failure was that it did not pay attention to the complementary software that became available on other ecosystems. A big lesson here is that managing supplier and stakeholder value creation also creates strong support from customers because it creates value for all stakeholders and likewise draws financial capital and an associated increasing stock price. ***** 1 What are complementors? Or complementary products/services? Complementors, Porter’s sixth force, are companies or entities that sell or offer goods or services that are compatible with, or complementary to, the goods or services produced and sold in a given industry.

2 Can you explain Blackberry’s mistake as a problem of stakeholder management? How? Evidence: Blackberry held 43% of the commercial and government communication sectors. As consumers, including the business and governments segments, found the smartphone to be superior as far as utility, Blackberry’s market share began to decrease precipitously. Because Blackberry had remarkably loyal customers and a strong product, it failed to recognise the importance of Apple’s ecosystem innovation, which allowed it to expand and diversify its range of applications or its handheld computer (smartphone). Even now Blackberry has not been able to create the type of stakeholder ecosystem comparable to those of Apple and Google. The app situation is problematic because Blackberry doesn’t have the number of app developers of the Apple of Google ecosystems Blackberry restricted its development community and could not hope to innovate fast enough to compete with the iPhone’s positive feedback loop accruing value to customers, innovators, and content providers, resulting in profitable market share which drew capital market players as well. Answer: Blackberry’s mistake as a stakeholder management was that the business didn’t have enough app developers to create the type of ecosystem compared to Apple and Google. Furthermore, blackberry failed to recognise their loyal customers as they didn’t expand in different range of applications or handheld computers. Moreover, Blackberry restricted its development community and could not hope to innovate fast enough to compete with the iPhone’s positive feedback loop accruing value to customers, innovators, and content providers, resulting in profitable market share which drew capital market players as well.

3

4...