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CONTENTS
1. Introduction
1.1 Company overview – Research in Motion Ltd.
1.2 Strategic Business Unit – SBU of Research in Motion Ltd.
1.3 Smartphone Industry
1.4 Geographical Region
2. External analysis of the Smartphone Industry
2.1 Analysis of the Macro-Environment – PESTEL Analysis
2.2 Analysis of the Micro-Environment – Porter Five Forces Analysis
3. Internal analysis of RIM Ltd., Smartphone Division
3.1 Value Chain analysis
3.2 Resource Based View
3.3 Dynamic Capabilities
3.4 Core Competencies
3.5 SWOT analysis
4. Evaluation of possible future strategies for the company
4.1 Key strategic issues facing RIM in 2012:
4.2 Evaluation the strategy of launching BlackBerry 10 Platform unveiled in May 2012
4.2.1 Strategic Logic
4.2.2 Strategy Evaluation
5. Implementation of strategic change
6. Conclusion
APPENDICES
Appendix 1: PESTEL Analysis
Appendix 2: Porter Five Forces Analysis
Appendix 3: Value Chain Analysis
Appendix 4: VRIO Analysis
REFERENCES
Nội dung
SM0495
BUSINESS ENVIRONMENTAND
STRATEGIC MANAGEMENT
Tutor: Dr. Gregory Ludwig
A MANAGEMENT REPORT OF RESEARCH IN
MOTION (RIM) LTD.
Words count: 3,296 words
PROGRAMME: MSc of Business with Hospitality and Tourism Management
Table of Contents
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CONTENTS
1. Introduction
1.1 Company overview – Research in Motion Ltd.
Research In Motion (RIM) Ltd. was incorporated in 1984 by Michael Lazaridis
and Douglas Fregin in Waterloo, Ontario, Canada under the Ontario Business
Corporations Act. RIM is engaged in the research, design, manufacture and
sale of wireless and is a global leader in wireless innovation, revolutionized
the mobile industry with the introduction of the BlackBerry solution in 1999.
(Euromonitor, 2011)
The company is now operating three strategicbusiness units (SBUs) are:
smartphone, tablets, and apps and software (RIM, 2012). The company
recorded revenues till end of February in financial year 2011 was $19,907
million with the largest geographic market is US accounted by 39.3% of the
total revenues. In this geographical market, the financial year 2011, revenues
reached $7,823 million compare to the two biggest markets are UK ($2,218
million) and Canada ($1,408 million).
1.2 StrategicBusiness Unit – SBU of Research in Motion Ltd.
Johnson et al (2008) defined StrategicBusiness Unit (SBU) as a part of an
organization which has a different external market with other SBUs. RIM has
different SBUs such as services, software, smartphones, tablet, etc with the various
in targeted market and customers. Smartphones will be chosen as the core SBU for
this report because it’s the second pioneer strategic unit of RIM.
1.3 Smartphone Industry
Euromonitor (2012) stated that the mobile business intelligence has
suggested that handheld devices such as such as smartphone will be consumed
33% of business intelligence functionality by 2013 ad smartphone industry also be
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predicted grow critically in 2010 – 2015 which provide opportunities for the
manufacturer. However, according to Euromonitor (2011), there is a threat for
smartphone manufacturers like they have to reduce the cost in the growth stage
2012 – 2015 due to facing with the prolonged financial problems by the pre-paid
price with phone contacts.
1.4 Geographical Region
USA is the second largest geographical revenue of RIM. In 2010, the mobile
phone category grows by 13% in current value terms to reach US$13 billion and
volume sales of mobile phones are expected to increase by 5% over the forecast
period with growth exclusively emerging from the smartphone category (Euromonitor,
2011). Thus, USA is chosen as the market to analyse.
2. External analysis of the Smartphone Industry
Fiscal 2011 has the strong financial performance of exceptional growth and
accomplishment with consistent, further expansion of global market share. The
US is the largest geographical revenue mix of RIM with 39.3% along with the
record shipments of over 52 million BlackBerry Smartphones. Therefore, the
report will be narrowed to analysis the macro and micro environment of
smartphone industry in US region to examine the opportunities and threats within
the industry on the time frame is 5 years (2012 – 2017).
2.1 Analysis of the Macro-Environment – PESTEL Analysis
Appendix 1: PESTEL analysis
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To analyse the factors and trends of the macro environment, PESTEL
framework is considered as the good one which is also the traditional analytical tool
to investigate the factors affect on the outside organization in big scale and also to
identify and explain the future’s opportunities and threats of an industry. However,
this framework is considered that have some limitations as Burt et al (2006)
discussed that the six categories included in PESTEL such as the categories of
Political – Economic – Socio Cultural – Technological – Environmentand Legal are
broad and not generic or specific applicable to the analysis of the environment
outside the organization. Furthermore, in personally, I find PESTEL simply as a list
making exercise, hard to predict future, outcome not really accurate, it should be
more than 6 categories and much date need to be consider, the requirements of
selecting the key issues from threats/ opportunities to conclude the analysis with the
continuously changing of macro – environment. The alternative frameworks for
PESTEL can be a scenario planning and SPENT according to the suggestion of
Campbell (2002).
The critical factors influence mostly on smartphone industry is technology,
with software and data service advances which is considered as the competitive
advantages in short term. At the moment, the 3G is the popular technology while the
4G is considered as a mix blessing for the smartphone manufacturers. As the
smartphone market matures in developed markets the 4G switchover is the likely
next revenue driver with hardware upgrades although cloud computing potentially
threatens post-sale revenue. (Euromonitor International, 2011)
4G is the main long term growth prospect for smartphones and a key value
sales driver in short run. However, the value of data processing and connectivity in
smartphones is likely to decline sharply as netbooks, tablet computers, and hybrid
devices become primary channels by which consumers’ access mobile online
content.
4G threatens the revenue stream from platform-specific content as increased
speeds will facilitate growth in mobile cloud computing, specifically browser-based,
platform-independent applications.
2.2 Analysis of the Micro-Environment – Porter Five Forces Analysis
Appendix 2: Porter Five Forces Analysis
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The Five Forces Framework was developed by Micheal Porter in 1985 has
used to assess and define the attractiveness of industries and sectors to identify
their potential for change and threats from outside the present set of competitors;
state of competition; competitive rivalry; shapes industry competitions. (McGahan,
2000; Porter, 1998).
However, the framework still contains some drawbacks as the framework has
strongly concerned about macro analysis but lack of emphasis on analysing specific
products – micro analysis, because of devised and developed in 1980s so it is
considered as out of date (Grundy, 2006). Personally, I find some limitations of the
framework as no dynamic changes; no statement on competition; no static for
comparison; out of date, thus, it will not give any solutions for problems.
Because of those limitations, in order to analyse the micro-environment, some
alternative frameworks could be used with different analytical tools such as: The
Toulmin Method (Toulmin, 1958); The Competitor Analysis (Chen, 1996); The Growth
Drivers and Porter’s strategic group analysis (Jeffs, 2010); and The Porter’s Generic
Strategies (Porter, 1980).
The smartphone industry is considered as the profitable and rapidly growing
industry. The threat of rivalry is the main threat to profitability and sustaining growth
of the manufacturer because of the numerous firms in this industry and the fact of
innovative technologies are often rapidly duplicated.
3. Internal analysis of RIM Ltd., Smartphone Division
3.1 Value Chain analysis
Appendix 3: Value Chain analysis
Value Chain framework was developed by Michael Porter in the book
‘Competitive Advantage: Creating and sustaining superior performance’ in 1985. The
framework is suggested as a tool to analyse and highlight the activities within and
around an organization deliver value, identify the value-added processes internally, a
sequential process of value-creating activities. Therefore, the company would
understand their building block competitive advantage and its sources in order to
contribute the strategic capabilities (Partovi, 1994; Porter, 1985 and Dess et al.,
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2007). Moreover, in personally, I find the Value Chain framework as the purpose of
identifying the strengths and weaknesses of the business.
However, as the two frameworks in external analysis, the Value Chain is also
claimed that it is short of the essential focus which is provided by the diversity of
sources of literature (Pitta and Laric, 2004). In personally, I find this framework is
quite out of date to apply to the current businessenvironment in term of not relative
and reality to the business.
The alternative framework for the Value Chain could be Network Value
Analysis, Added Value Chain and the Resource Based View (McPhee and Wheeler,
2006).
The Value Chain system at RIM is strong in term of the large inbound and
outbound logistics network with the strong investment in marketing strategies and
the sales division. According to RIM annual report (2011), the Company’s sales and
marketing efforts include collaboration with strategic partners and distribution
channels, as well as its own supporting sales and marketing teams, to promote the
sale of its products and services. Furthermore, the company shipment across the
world of RIM in 2011 is 52 million Blackberry smartphone (Euromonitor International,
2011).
However, the Value Chain analysis also provided the two potential areas
could be considered as the blockages (as well as weaknesses) of RIM is Firm
Infrastructure and Technology Development. Despite of the global operations
infrastructure are needed to expanded associated to the increasing demand of
people over the world towards the Blackberry smartphone, but, the cost for maintain
the infrastructure is too expensive which leads to the high expenses. Moreover, at
the heart of BlackBerry’s problems lies its troubled transition to a new operating
system in order to compete with the Iphone and Google’s Android, the company has
had to rebuild its software from the ground up.
3.2 Resource Based View
Appendix 4: VRIO analysis
Barney (1991) purposed the aim of how to sustain the competitive advantages
from the capabilities for a long time. The RBV is a framework for gaining insights as
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to why some competitors are more profitable than others. Furthermore, RBV is also
encouraging the development strategies for individual businessand help them to
understand whether the firms will gain competitive advantages, how sustainable
these competitive advantages are likely to be, and what the sources of these
competitive advantages to reveal how core competencies embedded in a firm can
help it exploit new product and market opportunities. (Dess et al, 2007; Barney,
2007)
The RBV as well as the VRIO framework is the powerful tool for analysing a
firm’s internal organizational strengths and weaknesses but still contains some
limitations. Three main limitations of this approach: the effect of unanticipated
changes in a firm’s environment; limited managerial effect on performance; and data
challenges associated with the unit of analysis (Dess et al, 2007; Lockett and
Thompson, 2001). Moreover, the RBV analysis fails to take into the high effect and
the new changing trends of the businessenvironment to gain the competitive
survival advantage because it is more important than just focus on the sustainable
competitive advantage itself (Lockett and Thompson, 2001). In personally, I find that
the RBV is out of date and must focus on capabilities more than resources.
The alternative analysis for improving the Resource Based View analysis can
be the Dynamic Capabilities analysis.
In case of RIM, the company has many tangible and intangible resources
which are discussed through the VRIO analysis (Appendix 4). In tangible resources,
RIM has the strong manufacturing plants, global leader in innovation wireless,
technology. RIM is not just solely located in Canada but lease facilities throughout
America, Europe, and Asia which proves that RIM has stable financial sources to pay
for their incurred expenses. Besides, RIM with the fame and reputation, experiences
in wireless innovation and hardware, software production, RIM is prove itself as the
second largest smartphone manufacturing company in USA.
Additionally, intangible resources such experiences, the strong financial
performance, innovation in technology and strong research and development are
considered as the best knowledge for RIM to produce and develop the BlackBerry
products. Moreover, RIM success is largely dependent on its continuing ability to
identify, attract, develop, motivate and retain skilled employees, including members
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of its executive team even though the there is a problem in structure of top
management in fiscal year 2011 (RIM Fiscal Annual Financial Information, 2012).
Moreover, Barney (1991) stated that the firm’s culture, which is generally viewed as
a strong unique intangible resource. In RIM, Human Resource is the source for
creating a corporate culture and preserving and developing employees’ skills as RIM
was awarded Canada’s Most Admired Corporate Culture (RIM, 2009).
In conclusion, the intangible resource is likely more critical implication towards
the success of the company as strong threshold resources (expertise in skills and
innovation technology to manufacture a high quality smartphones, generation in
supporting the applications and services) which can contribute to the achievement of
competitive advantage. RIM has a strong corporate brand and reputation as a global
leader wireless innovation and the second largest smartphone providers in the world
which help it to neutralise the threats and utilize the opportunities to compete with
other competitors.
3.3 Dynamic Capabilities
Teece et al. (1997) posited the dynamic capabilities approach to address the gap
of the highly dynamic businessenvironment challenged the original assumptions of
the RBV and dynamic capabilities are now considered to be an extension of the
RBV. Dynamic capabilities focus on the firm’s ability to face rapidly changing
environments, in order to create and renew resources, and change the resources
mix
However, like other frameworks, DCV still has its limitations. Collis (1994) stated
that DCV is not usually reliable sources for competitive advantages of the company.
Moreover, the relationship between knowledge acquisition and DCV sometimes not
clearly understandable (De Toni and Tonchia, 2003).
RIM has the core dynamic capability especially in relation to product research
and development (R&D). Technology base is the strong competitive advantage of the
company, thus, RIM invest in the R&D strategy seeks to provide broad market
applications for products derived from its technology base. As of March 3, 2012,
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RIM’s research and development team consisted of approximately 6,100 full time
employees. Research and development expense was approximately $1.6 billion in
fiscal 2012, compared to $1.4 billion in fiscal 2011. The development and support of
RIM’s products require several key areas of expertise within RIM to be closely
integrated. RIM has recruited and developed teams with expertise in these required
areas and the Company believes that the integration and focus of these teams
provides RIM with a significant competitive advantage (RIM, 2012).
3.4 Core Competencies
Core competencies are evaluated as the most critical factors to the success
or failure of the organization. Core competencies give firm the strategic capabilities
and competitive advantage which are not imitated by competitors. According to
Prahalad and Hamel (1990), core competencies are communication, involvement,
and a deep commitment to working across organizational boundaries, it involves
many levels of people and all functions. Moreover, core competencies are about
harmonizing streams of technology, also about the organization of work and delivery
value. In order to identify the potentially that the core competencies are created, it
might envision the future market and industry as well as stake them out ahead of the
competition (Thierauf, 2001). Moreover, the core competencies also gives firm the
strategic capabilities and competitive advantage to compete with others but cannot
apply to the SBU level.
In case of RIM, it has some key core competencies which are Research and
Development, Network Operations Centre and the core assets BlackBerry
Messenger.
Due to the strong Research and Development, RIM has create some success
factors as it states in the Annual Information Form 2011 and updates to the Fiscal
2012 Annual Financial Information: multi-network support; connectivity to enterprise
email and applications; connectivity to personal messaging, social networking,
multimedia and other applications; and access to third party applications.
Network Operation Centre (NOC) is a key aspect of competitive differentiation
among industry participants, RIM pioneered the use of a sophisticated multi-node
[...]... Planning in Exploring the Environment in view of the Limitations of PEST and its Derivatives’ • International Studies of Management and Organization (36) 3 Pp 50-76 Burt G, Wright G, Bradfield R, Cairns G and Heijden K (2006) ‘The Role of Scenario Planning in Exploring the Environment in View of the Limitations of PEST and Its Derivatives’, International Studies of Management and • Organisation, 36 (3),... we have a new • theory of the firm?’, Journal of Management, Vol 17, pp 121-154 Dess Et Al (2007) Strategic Management: Creating Competitive Advantages Mc-GrawHill P a g e | 25 • DeToni, A and Tonchia, S (2003), Strategic planning and firms’ competencies traditional approaches and new perspectives’, International Journal of Operations and Production Management, Vol 23, No 9, pp 947- • 976 Euromonitor... ‘Rethinking and reinventing Michael Porter’s Five Forces • model’, Strategic Change, Vol 15, No 5, pp 213-229 Henry, A (2008) Understanding StrategicManagement Oxford University • • Press Inc New York Jeffs, C (2010) StrategicManagement London: Sage Publications Johnson, G Et Al (2008) Exploring Corporate Strategy 8th Edition, Pearson • Education Landrum, N et Al (2000) ‘Leadership for strategic change’,... responsible for the routing of message to and from devices The key benefits of NOC are message delivery reliability, network utilization efficiency and security 3.5 SWOT analysis STRENGTHS WEAKNESSES P a g e | 12 Internal environment • • Growing brand loyalty together with strong brand image and recognition, financial performance Strong Research and Development • • Business relationship ad partners (dependence... change’, Leadership and • Organization Development Journal, Vol 27, Issue 4, pp 150-156 Locket A and Thompson S (2001) 'The resource-based view and economics', • Journal of Management, 27 (6), pp 723-755 Lockett, A and Thomson, S (2005) ‘The Resource-based view and economics’, Journal of Management, Vol 27, No 6, pp 803-829 P a g e | 26 • • McGahan, A.M (2000) ‘How industries evolve’, Business Strategy... • Business relationship ad partners (dependence on a small customers belong to businessand Government segments) Losing market share OPPORTUNITIES External environment • • • The rapidly innovation technology and a rising consumer expected for speed, convenience and attractive design in the smartphones Expanding portfolio and applications Fastest growing company in the world with the innovation technology... RIM Hence, Lazaridis and Balsille must support and nurture the changes within RIM immediately by beginning with the changes already in position and roles Moreover, they also need to empower the new chairwoman and new chief executive in term of making the roles and responsibilities clearly The clearly message from board members will encourage Heins and Stymiests to enact the change and establish their... has a number of carrier-focused business units that support the sales and marketing efforts of RIM’s carrier partners through training, technical account management and sales and marketing support (RIM, 2012) For distribution of personal and consumer applications, RIM provides wireless carriers with the ability to distribute select applications to their customer base and also provides BlackBerry App... variety of strategies including focused sales and marketing efforts, the continued use of strategic alliances and relationships to promote the sale of its products and services, as well as utilizing indirect sales and marketing teams RIM intends to expand its leadership through providing enterprise customers with new tools such as BlackBerry Mobile Fusion and BlackBerry Balance (RIM, 2012) • Service:... approach’, International Journal of Operations and Production • Management, Vol 14, Issue 6, pp 25-39 Pitta, D and Laric, M.V (2004) ‘Value Chain in Health Care Marketing’, • Journal of Consumer Marketing, Vol 21, No 7, pp 451-464 Planning in Exploring the Environment in View of the Limitations of PEST and Its Derivatives’, International Studies of Management and Organisation, 36 • (3), pp 50–76 Porter, .
SM0495
BUSINESS ENVIRONMENT AND
STRATEGIC MANAGEMENT
Tutor: Dr. Gregory Ludwig
A MANAGEMENT REPORT OF RESEARCH IN
MOTION. environment • Growing brand loyalty
together with strong
brand image and
recognition, financial
performance
• Strong Research and
Development
• Business