Research in Motion

13 Pages   |   3,494 Words

Research in Motion
Strategic Direction Based on SWOT Analysis

 Table of Contents
Company Background.. 3
SWOT Analysis. 4
Strengths. 4
Weaknesses. 5
Opportunities. 6
Threats. 7
Strategic Alternatives. 8
Form a Strategic Alliance with Other Mobile Phone Manufacturers. 8
Team up with Microsoft. 8
Enter Into Low-Cost Smartphone Segment. 8
Recommendations. 9
Conclusion.. 10
References. 11

Company Background

Research In Motion (RIM) is a Canadian origin company which is known for its smartphone brand Blackberry. Blackberry was once market leader in smartphone industry and is still widely known within consumer markets (Research in Motion, 2012). Research in Motion is a company which specializes in the design, manufacture and marketing of wireless solutions for the mobile communications market. Research in Motion also operates a system of electronic messaging wireless system. The headquarters of the company are located in Waterloo, Ontario (Sweeny, 2009). RIM sells devices that operate with different communication protocols GSM, CDMA, UMTS and iDEN. RIM also sponsors a research center for astrophysics – the RIM Park – located north of Waterloo (Research in Motion, 2012).

Mike Lazaridis founded Research In Motion in 1984 Waterloo in Ontario. Blackberry initially used to manufacture technology for other wireless communication companies including Motorola. It was in the year 1999 that the first BlackBerry is marketed. In 2001, the first BlackBerry with cellular phone was introduced which relied on GSM and GPRS standards. Blackberry was an instant success within consumer market due to its communication system. However, during its initial success RIM was challenged by NTP for violating eight patents in the United States (RIM Official Website, 2012). In 2005, the Court of Appeal concluded that RIM has violated patents of NTP and RIM could be banned from sale in the U.S. BlackBerry was used by about three million users in the United States at that time. In 2006, an agreement was reached between RIM and NTP. This decision marks RIM's desire to move on and focus on the arrival of Microsoft in this lucrative market it dominates the last few years.

 

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In 2010, Research In Motion fell to the position of the fourth global manufacturer of cell phones, with 10.6 million units sold, ahead of Sony Ericsson with 10.5 million. Strategic difficulties ensued for RIM. In 2011, the company announced that it will eliminate 2,000 jobs by the end of 2011 (Research in Motion, 2012). The same year, the touchpad BlackBerry PlayBook was launched. By the end of 2011, Research In Motion announced that it suffered a loss of 125 million U.S. dollars in the last quarter of 2011 and saw its annual net profit divided by three in the year ended March 3, 2012. For the past year, the market share of Blackberry phones in the world decreased from 14% to 8%. The paper carries out SWOT analysis for Research in Motion to identify strengths and weaknesses of the organization and crosscheck them with opportunities and threats in the external environment. The objective is to device appropriate strategic response for Research in Motion to enable is to recover from its downward spiraling strategic situation and to regain its competitive position in consumer markets. 

SWOT Analysis

Strengths the biggest strength of Research in Motion – found from the SWOT analysis exercise) is that it possesses a known brand name which has a high recognition among consumer markets. BlackBerry by Research in Motion was indeed a breakthrough technology in mobile communication. The device allows users to send and receive emails and used to receive all types of notifications through push mode in real time, without needing to connect to a server. This is a major attraction for business users with busy lifestyles (Böhm, 2008). BlackBerry Messenger (BBM) is widely used for instant messaging and notifications from social networks like Facebook or Twitter are also enabled. Compression mode reduces the size of the mail, which facilitates synchronization of e-mails with the mail server via the network of mobile phone on which the device is connected. Thus, sending email is as simple as sending an SMS or MMS on RIM’s device (Chen & Hsieh, 2012). These functionalities of the product are responsible for a large loyal following of the brand.
User friendliness of RIM’s product is also recognized as quick reading of attachments whether they are in ppt, pdf, wpd, Html, Txt, Zip, Jpg, or Bmp format. The user can load the selection of the desired part only. The advantage of this technique is that it allows users to to quickly read large attachments through the compression of information. Attachments can see their size divided by 200 (Chang & Chen, 2004). For example, a received email with a photo of 3MB will be sent on the BlackBerry with the same image reduced to about 20 kb. The technique also allows users to navigate on the Internet. Web interface provides access to BlackBerry email accounts and manage (add, delete, etc.).
The loyalty and class of the user of RIM’s products is also termed as its strength. There are approximately 46 million loyal BlackBerry users around the world which is a source of sustainable revenues for the company (Sweeny, 2009). These users are also the one with high purchasing power. It is also quoted that around one million officials of the United States Government regularly use Blackberry.
The diversified source of revenues for Research in Motion is also widely termed as its strength. The company produces hardware and network devices for several other companies which provide the organization with sustainable revenues from b2b markets (LaRue, Mitchell, & Terhorst, 2010). Also, the business divisions pertaining to industrial technological sales have been performing consistently despite fluctuations in consumer segment business of the company (Han, Porterfield, & Li, Impact of industry competition on contract manufacturing: An empirical study of U.S. manufacturers, 2012).
The in-house research and development facilities of the company are also its key strength. User friendly applications by the company are responsible for the competitive edge of the organization (Han & Porterfield, Impact of industry competition on contract manufacturing: An empirical study of U.S. manufacturers , 2012). BlackBerry Desktop Software is offered by the company to its users which enable them to synchronize and manage data, applications, organizer from Outlook, as well as, multimedia files (music, pictures, videos) between a computer and BlackBerry. The connection mode allows Bluetooth as the connection cable management applications and access to the file system of the device. 
Weaknesses the SWOT analysis exercise carried out for this paper, prominently indicated that the major weakness of RIM is the lack of compatibility of its technology with other web-based technologies. While the android operating system allows users to readily integrate them with freely available applications, software and online services, RIM’s users are denied this choice.
Security issues have also been expressed by a sizeable number of users. An email sent using a BlackBerry is routed through servers located in Canada, United States and United Kingdom. So there are doubts about the fact that the all members of the program Echelon can monitor servers from RIM (Pitt, Parent, & Junglas, 2011). For instance, even the French Government considers that this can present security risks and espionage for France, and a circular from the General Secretariat of National Defense, prohibits the use of BlackBerry devices among French cabinet ministers and the certified companies Ministry of Defense.
The frequent network failures of RIM have also damaged its reputation in consumer markets. Following a major server failure, from 10 to 13 October 2011, the connected BlackBerry services have experienced delays in several regions of the world which caused major dissatisfaction of its users and fueled rumors of sale or redemption of the group. 
Opportunities Several opportunities are created in the external environment following the growth in the usage of smartphone from business executives to mass market. According to a new study, there are more and more smart phones and Twitter accounts being adopted among young target audiences. Although studies and surveys on new technologies become obsolete almost as quickly as the gadgets themselves, it is still useful to consider, the cell phone manufacturers can better identify the demand for their products. At present it lies with younger target audiences and even middle-aged women (Meyer, 2002 ). A recent study on smart phones and the use of social networks within emerging economies was conducted. The results are very surprising in terms of the speed with which new technologies are integrated within third world countries and it is estimated that the situation is similar in all emerging economies.
The opportunities created by the growth in the market for smartphone can be measured by the fact that 69% of respondents acknowledged that they own a smartphone. Android platform remains the most popular, followed by the iPhone’s interface and Blackberry platforms. Half of participants acknowledged that their smartphones are now essential to the management of their businesses (Pahl & Richter, 2007). Access to email, messaging applications and Internet are the three most popular features. Smartphone applications used most often are related to weather, market prices and finance, such as market information and online banking. RIM can explore this opportunity area by developing advanced applications related to the above mentioned areas for its Blackberry operating system. Perhaps the most important opportunity area found from the study is that 84% of respondents report using a social networking site on their phone. Twitter, Facebook and YouTube are the three most popular websites (Pitt, Parent, & Junglas, 2011). Blackberry smartphones can be built around these services to make the most of the above mentioned opportunities.
The real emerging opportunity in smartphone segment is their use as commerce devices. Futurists argue that paper money will soon by replaced by mobile devices. Smartphone will be able to make payments at stores. Innovative applications for smartphones already allows users to replace other useful articles made of paper such as maps, board games and all forms of lists. Some of the opportunity areas for Research in Motion and other smartphone manufacturers are discussed in ensuing paragraphs.
Maps: Using online map services – for instance, Google Maps – users can make the most use of smartphones (Meyer, 2002 ). The program uses the GPS on a smartphone to determine where the user is located and to determine the best route to get from one place to another.
Data Storage: Many business-related applications allow users to replace their briefcase on your phone. Dropbox (for iPhones, Android and BlackBerry) and SkyDrive (for Windows phones) give the users access to data stored on their computer at home or even on their tablet.
Games: Online and offline gaming is a highly important opportunity area in which RIM has lagged so far. Ranging from classic games like Hangman, Sudoku or Scrabble or advanced games have been created for android platforms by independent developers. RIM can take advantage of this growing application of smartphone (Haberberg & Rieple, 2008).
Threats A number of threats are being faced by RIM in the intensifying competition of smartphone industry. According to statistics published by Strategy Analytics research market business, global shipments of smartphones are anticipated to slow down in the year 2013. Analysts have pointed out that even if the world economy to continue to grow, only the demand from emerging markets for smartphone will continue to grow while markets for North America are reaching maturity (Pitt, Parent, & Junglas, 2011). This situation will give the manufacturers price pressures.  It is expected that the downward trend in the average selling price of smartphones will continue to 2013.Thus RIM will be faced by high levels of cost pressures. Analysts noted that the best-selling iPhone and Galaxy S III from Apple and Samsung will remain away from disorder price competition due to their brand value proposition. RIM faced the threat of downward pressure on prices from manufacturers like LG, HTC, Nokia and RIM. Apple and Samsung has monopoly on the high-end market smart phone and the pressure of more intense downward pressure on prices means that competition between the other smartphone manufacturers will be more brutal.
Decrease in purchasing power is yet another major threat. It is estimated that global sales of mobile phones will plunge due to economic challenges faced by European countries and US. Mobile service operators are anticipated to apply pressure to mobile phone manufacturers, because in many parts of the world, including Europe and the United States, the process of selling mobile phones involves partnering with a service provider. The mobile operators often provide subsidies for mobile phones to encourage consumers to sign long-term contract. Some operators in Europe, including Spanish telecommunications has completely canceled the subsidy policy for mobile phones. This is a threat to all mobile phone manufacturers.

Strategic Alternatives

Form a Strategic Alliance with Other Mobile Phone Manufacturers RIM can leverage its strengths by creating potential partnership with other manufacturers, for instance, with Samsung to consolidate its supply chain. Through these synergies of strengths, the company can increase its market share to even more than the market share of Nokia and Apple and assume status of the world's biggest cell phone vendor. Samsung's smartphone possess the strength that they work on Android operating system and in the light of Google's acquisition of Motorola, both RIM and Samsung will need to prepare against potential competition from Google in the smartphone segment. This makes it logical for these companies to pool their strengths.
Team up with Microsoft Initially RIM was highly inclined towards its own operating system, however, it is almost impossible to operate in this economy within a vacuum. RIM can implement Windows as the operating system in its mobile phones, which will be a positive factor for the users of Blackberry. Microsoft is in need to make ways into mobile computing, and will be willing to offer concessions to potential partners. By partnering with Microsoft, RIM can outsource its research and development to Microsoft that will be a major strength for RIM. This will also save RIM considerable expenditure in R&D, which can be utilized in marketing and advertising of the brand.
Enter Into Low-Cost Smartphone Segment RIM can increase penetration of its brand in consumer markets by introducing low-priced variants into the market. This will enable the organization to tap into emerging markets of developing world where adoption of smartphone is rapidly increasing. It has been recognized in external analysis that smartphones is in growth stage of its product lifecycle in several developing countries representing a major opportunity. In addition, high-end smartphone market is dominated by Apple’s iPhone due to superior marketing and an aspirational brand appeal. 

Recommendations

Recommended strategy for RIM is the third strategy of introducing low-priced smartphones in consumer markets. Even though, smartphones are quickly becoming a necessity for majority of the target market, everyone does not possess the purchasing power to acquire a smartphone. It has been recognized in the weaknesses of RIM that the product of the company does not possesses mass market appeal which hinders growth of market share in comparison to companies like Nokia, Samsung, Sony Erickson and Motorola. To overcome this weakness and to leverage its strength of a known brand name RIM can design a low-end smartphone with bare minimum features to cater to emerging markets of developing world like India, Indonesia and African countries. The strategy also makes sense because branding of Apple iPhone is much stronger in the most high-end segment of smartphone market, rendering RIM at a competitive disadvantage. Even though, the profit margin may be low for this particular product segment, the high turnover will make up for lower margins (Haberberg and Rieple, 2008). This strategy is termed as the optimal strategy because it also takes into account the opportunity in the external environment of growing smartphone market and counter the threat of strengthening price competition. Hence, the strategy is recommended by both internal and external analysis of the company.
The recommended strategic focus for RIM is to focus on integration of technologies. As the technology continue to evolve, consumers will no longer be basing their purchase decisions on the technological advancement of the product only, rather their decisions will be based on the integration of technology in their lives. Consumers will no longer with satisfied with a smartphone which has a superior interface, rather they will demand that their smartphone must integrate with their social media, makes sharing easy, enables them to transfer their work between their laptops, office computers, mobiles and tablets. Hence, RIM will need to focus on integrating its technology with Google Docs, Social media, digital media libraries and several other essentials which are part of user lives.
RIM is also recommended to enhance its coordination with mobile service providers. The company needs to improve its coordination with mobile service providers because marketing in telephony will no longer be done in isolation; rather two essential partners – mobile phone manufacturer and telephony service provider – will need to offer a bundle solution to gain competitive advantage in the market. Also, smartphone require provisions for excellent data service which is only possible if RIM create close links with data service providers and make them partners in product development. This long-term strategy will enable RIM to maintain a competitive edge in the smartphone industry.

Conclusion

The paper carried out SWOT analysis for Research in Motion to identify strengths and weaknesses of the organization and crosscheck them with opportunities and threats in the external environment. The objective was to device appropriate strategic response for Research in Motion to enable is to recover from its downward spiraling strategic situation and to regain its competitive position in consumer markets. It is concluded that the strategy which utilizes the strengths of RIM to exploit opportunities created in the external market is to launch low cost mobile phones in the market.  

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