RIM – Research in Motion
External Environment Overview
Going back 10 years ago, RIM actually used to have a far larger share of the smart phone market (roughly 40%) starting from the latter half of the 1990s till 2005. It was only when other manufacturers (i.e. Nokia, Samsung, Siemens, and Motorola) gained sufficient traction that smart phone sales for the company began to dip (Castald, 2012). The proverbial nail in the coffin came when Apple released the iPhone, from 2009 till the present the iPhone dominated the smart phone market pushing other competitors, especially RIM, onto the sidelines (Castald, 2012). While RIM has attempted to compensate for this by venturing into other markets and attempting to diversify its service offerings, the fact remains that the company should have delved deeper into appropriate product development early on instead of relying on its old business model. As a result, RIM’s shares have been falling in price as of late with many speculating that this once great company may actually go under (Castald, 2012).
Internal Environment Overview
When examining the main reason behind why RIM was unable to sustain its market share despite its earlier significant lead, various experts agree that it was connected to the fact that RIM’s business model was obsolete and the way in which it chose to market itself was all wrong when compared to the rise of the iPhone (Castald, 2012). First and foremost, what you have to understand is that the marketing campaign of RIM centered almost entirely on the Blackberry being a phone for people in the fast paced world of business and international trade. While this was an effective campaign during the height of its popularity, the company neglected to become a more widespread entity that catered to more than just one particular niche. Furthermore, Blackberries lacked a certain degree of innovation in the way in which they provided value to customers (Castald, 2012). Yes, they released models which were smaller, faster and had higher memory capacities; however, they still had little innovative programming architecture and basically were just releasing the same phone over and over again and were repackaging it as being better on the basis of sleeker designs and increased memory capacities. This differs significantly from the way in which the iPhone was developed wherein each new iteration had a unique feature which was further enhanced by the various Apps a customer could download from the Apple App store.
Competitive Advantage
The main consumer segment that RIM originally targeted were consumers involved in business or international trading (Castald, 2012). They did this by specifically designing the phones to have MS Outlook access, allow customers to access their emails on the go while at the same time created the Blackberry Mobile network in order to ensure a certain degree of privacy when it came to people that could contact them. While such a strategy worked for several years, with the arrival of the iPhone and the way in which it revolutionized the smart phone market this necessitated a distinct shift in consumer segment strategies wherein the company decided to expand their products into the realm of social networking wherein the latest Blackberry models allowed their users to use social media platforms such as Facebook, Twitter and other such social media sites. In effect, this expanded the customer segment range of the company to include individuals who enjoy receiving and making constant updates to their social network (Castald, 2012).
IBM
Environment Overview
While the 2008 global financial crisis in effect obliterated the profit margins of hundreds of multinational companies around the world, IBM was largely unaffected and by 2009 actually emerged from the crisis with a 20% higher third quarter income which amounted to $2.05 per share (Hempel, 2012). The reason behind why IBM continued to be profitable despite the uncertain financial environment at the time is actually connected to the company relinquishing its production and sale of computer hardware and various devices directly to normal consumers. Instead, the company focused on the creation of software and service products with an emphasis on long term service contracts with corporations, government departments and various organizations. What you have to understand is that a large percentage of the technology based corporations that were negatively affected by the 2008 crisis were affected due to a lack of consumer demand for their products.
People were in effect to scared to buy new laptops, computers or other forms of technology based products as a result of not only the high degrees of unemployment that permeated the market at the time but it was also due to the fact that there was a certain degree of fear in the markets regarding the possibility of job loss. Since IBM catered directly to corporations, this in effect allowed the company to altogether avoid the slump affecting other technology based enterprises especially when taking into consideration the long term contracts the company had (Hempel, 2012).
Furthermore, as a direct result of the crisis many companies turned towards the concepts of Six Sigma and lean operations resulting in a distinct shift towards more efficient computer based operations as well as turned towards outsourcing various aspects of their operations to other countries. This in effect necessitated the creation of newer and better software and hardware infrastructures which IBM was only too happy to provide during this particular period of time. On the other hand, it must be noted that as of late IBM has experienced some financial difficulties as many of its clients within Europe have been affected by the debt crisis which has severely constrained their ability to expand/upgrade their systems. IBM has made up for this though by continuing to expand its outsourced operations within India and the Philippines which enabled the company to more or less breakeven despite the lack of demand from its European clientele (Hempel, 2012).
Competitive Advantage
The gains achieved by IBM within the past 15 years can all be attributed to its marketing strategy of removing itself from direct competition within the currently oversaturated PC market. Instead, the company has focused on direct business to business sales wherein its primary clients are multinational corporations, government and educational institutions, the airline industry, the food services industry as well as several other industries within the global economy today that rely on the technology, software and consulting expertise of IBM in order to resolve their technology related issues (Hempel, 2012).
Measurement Guidelines
In the case of both RIM and IBM, the measurement guidelines both companies utilize in order to determine the effectiveness of their business strategies come in the form of the degree of market penetration and market share each company has within their respective markets. This boils down to the amount of consumers within a given market that are willing to utilize that company’s products as compared to that of other companies.
Effectiveness of Guidelines
Overall, the market penetration/market share guidelines utilized by either company is actually quite effective in enabling both IBM and RIM to determine the effectiveness of their current operational structure.
Reference List
Castald, J. (2012). The end OF RIM. (cover story). Canadian Business, 85(13), 22.
Hempel, J. (2012). IBM’S new CEO looks ahead. Fortune, 166(6), 116-123.