Introduction
Research In Motion is a multinational company based in Ontario Canada whose core business is in design and manufacture of market wireless solutions for the global mobile telecommunications market. Specifically, the company’s products are crucial in providing platforms such as e-mail, short message service internet, browsing and intranet through which customers easily access information.
The BlackBerry wireless solution is the most famous device under RIM portfolio. Others include, the RIM Wireless handheld product line and other software development tools. Compared to competitors like Nokia and Motorola, RIM is considerably small in mobile communications device industry. However, the company has a large share in the North American, European, African and Middle East smartphone sectors with Nokia again presenting considerable challenge.
Having invested heavily in Research and Development in the last ten years, RIM’s products designed with state of the art technology have led to phenomenal growth of the company. Sound financial situation coupled with innovation have been key to the company’s explosive growth globally with its flagship BlackBerry device that is popular in the corporate world especially for its push e-mail services. Despite the sound financial footing on which the company operates, there is concern that RIM is becoming a victim of its own success. Unexpected growth has come with challenges including occasional service breakdown and data outages, ineffective marketing strategies and a limited customer list.
This discussion will help put into focus the growth aspect of RIM and determine if the company is having difficulty in keeping up with its rapid growth. Additionally, the discussion will present a SWOT analysis of RIM before providing strategic alternatives the author thinks the company must implement for effective operation in the market. Besides, there will be recommendations and a plan encompassing short and long-term actions the company should take to remain relevant in the smartphone market.
Key Issue
According to Bragg, success is becoming one of the most serious problems facing successful companies in the world today. Ideally, the above assertion is paradoxical. However, the current business world is so interconnected that only swift recognition of problems and implementation of sound business practices from managers can only avert a bust brought by sudden demand surges and business booms. RIM is a typical example of the companies growing tremendously in a short span of time owing to the popularity f their products. Explosive growth brings overnight success to companies and only well-trained and experienced managers are better able to guide the company through the periods with minimum damage and sustained profits.
It is important therefore that companies like RIM identify key precise functional areas in a company that are crucial to managing explosive growth including IT, accounting, and customer service, finance and HR. Additionally, it is only for the good of the company that managers master strategies for planning, financing and managing explosive growth with the use of various tools such as metrics, reporting systems and cash and budget control systems. Considering therefore that RIM is uniquely in this position, it is important that to conduct a SWOT analysis of the company for easier identification of the areas that need improvement and the strategies that it leaders need to implement to ensure RIM explosive growth is well-managed.
SWOT Analysis
Strengths
RIM has been able to record such phenomenal growth because of strengths that include the following:
Strong and Effective Research and Development Management
The company has efficient and vibrant R&D unit that is behind innovative products such as BlackBerry. In recent times, RIM has raised considerably the resources spent in R&D in order to maintain core competency in smartphone segment. In addition, the company has a long-term arrangement with the University of Waterloo for a regular supply of its employees especially in the R&D department. Besides the R&D centers in Canada, RIM announced in 2009 of plans to open an office and training facility in Australia with a research and development center being one of the inclusions of the new offices. The company’s R&D unit therefore offers it one of its key strengths in sustaining explosive growth till it achieves consistency.
Strong Brand Name and Solid Consumer Base
A brand name is always key to customer subscription and maintenance. RIM, through its flagship product the BlackBerry has been able to build a strong brand name and a loyal clientele all over the world. In the smartphone market segment, the effectiveness of the BlackBerry and other RIM products have led to growing faith in RIM effectively creating an almost assured consumer following. The strong RIM brand name therefore offers unique opportunities and a plat form on which RIM is likely to further its growth to effectively manage its explosive growth.
Strong Financial Performance
In August 2009, RIM ranked as the fastest growing company in the world by Fortune magazine with a solid growth in profits topping 84% over three years, in the backdrop of the global financial crisis and recession. Besides, the company’s financial statement displays superior profits, strong financial rations and low dependence on debt. In effect therefore, the company is in a better position both in the long and short terms to return profits, returns on equity besides spurring growth in investor confidence. Besides, the strong financial position is crucial to its future expansion plans through mergers and acquisitions as well as improving its R&D. That way RIM is in better position to take on competition from rivals such as Nokia and Motorola.
Product Patents
Like many technological companies, RIM owns most of the products sold under its name. According to the company, RIM has been able to establish patents to most of its products relating to products in data security, wireless transmission of data as well as wireless push e-mail solutions. Given the dynamism associated with technology products, the patents put RIM in a better position to extend their patent license agreements based on the ownership of parent products. Additionally, patent ownership gives RIM an upper hand when bargaining for any technological or financial agreements with rivals or business partners.
Established Bandwidth Infrastructure
RIM has in place a bandwidth saving infrastructure that comes in handy especially in better management of its network. The fact that RIM relies minimally on other bandwidth providers for provision of this service is a strong point that helps in financial savings as well as effective network management.
Opportunities
Since the start of technology boom period in the late 90’s, technology and especially communication related companies have experienced endless opportunities. The opportunities still exist nowadays through increased mobile inter-connectivity. Despite its growth, RIM still has opportunities in the following areas, which are key to effective sustenance of explosive growth.
Mobile Advertising
Mobile advertising is fast growing and on course to surpass other forms of advertising. According to research by mobile analytics firm Flurry, Cost per thousand impressions revenue on Android applications topped $2.5. Flurry further estimates that the US has a potential mobile advertising application inventory value of more than $ 1bn and potential to reach $4.5bn by the end of 2012. Development of gadgets like the smartphone opened new revenue avenues for these companies including RIM.
There is every reason to believe that with increased uptake of these mobile gadgets and a reduced dependence on the PC, more business will have no choice but to invest in mobile advertising. RIM stands to gain big with development of innovative applications and products primarily targeting mobile advertising. Though rivals like Nokia and Motorola and other mobile telecommunications carriers have their presence in the mobile advertising field, the uniqueness and popularity of RIM products gives it a clear advantage to tap into the field.
Shift to and Growth of Mobile Workforce
Tradition of working from a physical office is fast losing pace. Total mobile worldwide mobile workforce is likely to reach one billion by the end of 2011. Nowadays, industries are increasingly reducing dependence on fixed facilities with decentralization of office functions taking root through broadband wireless applications. Availability of broadband speeds in business establishments, presence of wireless broadband in major metropolitan areas and development of devices such as cell phones, and note books have increased the number of people and businesses that operate through mobile office.
Many employers who are expanding their mobile workforce cite notebooks and smartphones especially the BlackBerry are the primary gadgets through which the trend is taking root. According to the Telework Coalition, over 80% of all companies in the US offer Telecommuting while slightly over 55% of companies consider themselves virtual workplaces. TC further says that more than 65% of workers used mobile wireless computing in the US. The above is a clear indication of the potential opportunity RIM has in sustaining its explosive growth through availability of its products to mobile workforce.
Growth in Cellular Phone Use in Developing Nations
Developing nations have emerged as one of the fastest growth frontiers in mobile telephony. In fact Africa has the highest growth rates in mobile web, voice and mobile commerce. Though these growth stems from an increased uptake of mobile telephony among rural folk, developing countries have mobile carriers operating in an industry still at its infancy in their respective regions. As result therefore uptake of smartphones is high especially among high-end segments of the population in developing nations’ urban regions. With these nations posting phenomenal economic growth rates and more people joining the middle class, it presents big market opportunities to companies like RIM to move their products.
Growing Use of Enhanced Data Networks
Development and deployment of enhanced data networks like EDGE and GSM by mobile phone carriers have led to increased access to the internet. These technologies mostly use internet enabled advanced gadgets like smartphones manufactured by companies such as RIM. Gadgets with capabilities such as BlackBerry are well suited to fit into the use of enhanced data networks. It therefore presents an opportunity for RIM to move its products in order to maintain and manage its explosive growth.
Weaknesses
Poor Forecasting Techniques
Despite the resources at its disposal, RIM has in the past shown some weaknesses in its projections. For instance, the announced in December 2011, worse than expected sales in its newest product the PlayBook tablet. At the same time, the company had earlier on announced less than expected results of its own financial estimates for this financial year. This trend is indication of inconsistencies with its forecasting ways and does not augur well with investors. For instance on receiving the news of the PlayBook sales on December 2nd, the company’s shares fell by 9% in morning trading.
Inconsistencies in Meeting Technical Demands
RIM seems overwhelmed by growth in the demand for its products. For instance, one of the main reasons behind poor sales of the PlayBook is delay in releasing of a software update crucial to optimum working of the gadget’s email, calendar and address book functions.
Threats
Competition
The main threat to RIM’s business is competition from companies such as Google and Apple. While Nokia still is the leading in the smartphone market, RIM’s market has shrunk on the face of onslaught from the two American companies. Together, Apple and Google hold approximately 63% of the US smartphone market with RIM and Microsoft trailing. What is worse, RIM had its market slashed while it had chance to consolidate its niche. With all companies in the ,market slated to release updates to their smart products and an already functioning partnership between Microsoft and Nokia, RIM has to come up with more effective strategies to counter the completion.
Falling Economic Fortunes
The financial crisis and the recession have led to erosion of the purchasing power of some of the RIM’s clientele. This is likely to reflect in the long-term in terms of falling revenues and possible, reduced market share.
Strategic Alternatives
Mobile Advertising Software
It is absolutely necessary and to RIM’s advantage to develop an exclusively ad-supported software that will attract advertising firms as the main clients. The strategy is already working with Google and the fact that there is no universal patent right to one company makes it easier for RIM to develop it. That way, the company stands the chance to increase its revenue streams through mobile advertising.
Improve Network/Bandwidth
RIM will it find beneficial in the long-term to expand their bandwidth to accommodate more data intensive services other than push e-mail. Besides, RIM will most likely find favor with many carriers with an increased bandwidth. Carriers as a result will encourage their customers to use RIM phones in anticipations of the savings made from increased bandwidth. Additionally, it is imperative that all RIM handsets be Wi-Fi enabled to net more clients in order to effectively compete with rivals such as Google and Apple.
Creation of a Forecasting Division
There is concern that inconsistencies associated with RIM forecasting will in the long-run eat into the company’s revenue. The above is the likely scenario if a well-organized division is lacking. The division, if necessary will access all resources required to give precise prediction. That way, RIM will be in a better position to plan its sales numbers to avoid unsold inventory as is the case with the PlayBook.
International Expansion
As earlier mentioned, Nokia still dominates the smartphone market. There is also competition from Apple, Google and Microsoft. To increase market share especially to emerging markets such as South America and other developing regions such as Africa, RIM needs to adopt an aggressive international marketing strategy to increase market penetration especially among high-end consumers.
Recommendation
Research and Development
It is necessary for RIM to increase resources in R&D in order to grow their portfolio and effectively increase their revenue channels. RIM seems to concentrate in diversifying its devices niche. For long-term survival and sustenance of its explosive growth, RIM must develop have in place a diverse mix of products to effectively take on competitors like Google and Nokia. R&D must especially concentration of ad-supported software which is helping sustain growth in other companies like Google and Apple.
Perhaps in an indirect way to capitalize on growing innovation in similar small companies, RIM should consider stepping up its acquisitions and takeovers. The targeted small companies have an already established product portfolio on which RIM can work on to improve its own portfolio.
International Expansion
RIM has already lost market share in the US and is facing stiff competition from Nokia and other competitors internationally. One of the markets RIM should target is China whose mobile phone market potential is more than 700 million people. Sustenance of RIM’s explosive growth is unlikely if the company concentrates on already saturated markets such as the US and Europe. Emerging markets especially India, China, South America and Africa offer the best opportunity to carve a solid market share for effective completion with rivals. It therefore calls for aggressive international marketing by RIM in the above regions to ensure ready market for an improved RIM portfolio.
Plan of Action
A typical Plan of action must closely follow the outcome of the SWOT analysis. The plan of action includes strategies to enhance RIM’s strengths in order to take advantage of the available opportunities as identified in the SWOT analysis. Enhancing strengths will effectively lead to overcoming and eventual elimination of the prevailing weaknesses. Additionally, it would mean use of strengths to deal with threats especially competition. The table below summarizes the plan of action that RIM can implement for effective management of explosive growth.
Bibliography
Bragg, S., Managing Explosive Corporate Growth. John Wiley, New York, 1999, p. 23.
Mazutis, D. et al., Research in Motion: managing explosive growth. Ivey Publishing, New York, 2008, pp.1-21.
Sweeny, A., BlackBerry planet: the story of Research in Motion and the little Device that too the World by Storm. Routledge, New York, 2009, p. 56.