Executive Summary
Research in Motion was facing a problem of reduced sales despite the increase in the amount of financial resources invested in research and development. This was more than a success after the release of the Blackberry mobile device. This was brought about mainly by the intensive research and development plans that were being carried out.
The market in general, was growing at a very high rate thus increasing competition. This presented a great challenge to the organizations which would be forced to improve their products to remain competitive in the market. Changing their operations at that point was compared to changing the engine of a vehicle while it was moving at a speed of two hundred kilometers per hour, which according to the chief technology officer for software in the organization, would never be possible.
Decision making in this scenario according to the Diamond – E framework first involves the determination of the goals, followed by the product market, the competition framework and ultimately business systems (Jones and Charles, 45). These are all determined by five major factors which include the organization, the strategy in place, management preference, the available resources and the environment of operation.
In this case study, the preference of management is that the company should continue to deliver exceptional sales as experienced earlier on, if the same amount of investment will still be used on research and development. It is clear that something needs to be done to ensure that the company stays on top of the market in the mobile communication industry.
There is a difference between what the management wants to do, what they can do given the available resources and what they need to do when the ultimate decision is made (Jones and Charles, 46). With the increasing fame of the blackberry product, the company was faced with the decision of how to increase their production.
The technology, on the other hand, was improving at a very high rate. For the company to maintain its status in the industry, the best course of action would be to diversify its production and sub divide operations into different departments, handling different elements of the company. They should also ensure that the labor force they are hiring is up to date with the new technology, hence saving them the cost of having to train and accustom them to the developing trends.
Exhibits 1 and 2 below are illustrations of the issues handled in strategic analysis and action development.
Exhibit 1: The strategy triangle
(Author, 2011)
Exhibit 2: Strategic Tension Triangle
Key Issue/Decision Point
The key issue in this organization was to maintain the high rates of growth in a market where the number of competitors was increasing on a daily basis. This, however, was not the main issue since the company had managed to stay on top of this competition for a while. The main problem was that the CEO felt like they had reached the optimal point of operation and it appeared to him that they would run out of business sooner or later.
Based on the current strategies, Diamond –E drill management preferences mainly revolved around research and development, which involved training new talent into the organization. They had all the resources to achieve this strategy but, the problem they were facing was the changing environment. Below is an illustration of the Diamond E-drill format in the organization.
(Author, 2011)
The most rational decision would be to expand operations to many other parts of the world and ensure that their operations were recognized globally. Besides, expanding the business would mean greater market penetration thus increasing the firm’s revenue. Their current location was overflowing and it had reached a point where it was no longer beneficial to increase the size the work force. The other decision point would require diversifying their labor force which currently was being obtained from the Waterloo University.
This is owing to the fact that the rate of development of technological advances was different in different places. The people working in these areas would, therefore, be obtained from the locale hence being in the position to understand the technological needs of the people in the locality. In other words, the work force obtained locally would reduce the overheads of the firm in terms of salary and expenses, thus, enabling the company to remain relatively stable.
The company is also faced with strategic risks common to many other organizations. These are the environmental risks in the short term and long term and the capability risks in the short term and long term as well. The short term environmental risks include the miscalculation when observing the environment. The result of this would be the failure in the strategies being employed to counter the growing competition.
Long term environmental risks in this case include changes in the operating environment such as failure to observe the growing competition and the likelihood experienced here is that of the strategy being considered obsolete. Capability risks on the other hand involve “the strategic demands exceeding the capacity to execute in the short run and the development of internal capabilities that are not consistent with the strategy in the long term (Crossan et al, 87).
The most important strategic issue here is the growing competition and a need to increase the scope of operations to counter the increasing level of competition. Strategic options for competitive advantage will therefore be an awakening milestone for effective planning and creativity in enhancing delivery of unique service than competitors. In this case, the firm will have a firm grip in a market niche than comparable firms.
Alternative Assessment
The other alternatives that could be used in assessing the situation in RIM include the porter’s Five Forces model and the pest analysis. According to Jones and Charles, the porter’s five forces model analyzes the five major forces that are the determinants to a company’s success (59).
The first force is the prospective entrants into the market which in this case has been on the increase at a very high rate lately. These pose a threat to the company as they reduce its market share. The other force is the suppliers whose bargaining power determines the success of the company. Suppliers in this case might include software developers who provide the company with the software that they install in the mobile devices (Tavana, 23).
Next are the buyers whose bargaining power affects the company’s productivity directly. The company should develop products for different levels of consumers and prosumers for them to reach a wide range of market.
The fourth force is the development of substitute products in the market which are a threat to the company’s market share as well. Finally, is the competition in the industry and this is at the centre of all the other forces. The firms in this industry compete especially when it comes to the incorporation of the latest technology in their gadgets. The porters five forces model is shown by Exhibit 4 below.
Exhibit 4: Porter’s five forces model
(Author, 2011)
The other alternative is the PEST analysis which is divided in to two major parts. The first part includes the macro forces which in this case are Political forces, Economic forces, Social forces and Technological forces hence the word PEST (Tavana, 25). The micro forces on the other hand are the elements of the macro forces and these include supply, competition and demand.
The main political forces affecting this company include the government laws on intellectual property while Economic forces are the forces that affect the level of demand and supply for the product. Social forces in this case typically include the integration of the society to using the product and finally are the technological forces which determine the extent to which the product is at par with the new technology.
Recommendation
Of all the three assessment tools that is, the diamond-E drill, Porters five forces model and the PEST analysis, the most commendable method is the Porters’ Five Forces model. The reason why this is commendable is because of the fact that it is comprehensive and covers all aspects of the market.
When using this method of analysis, the management of RIM is assured that they will not leave out any important market element. It looks in to the customers’ trends and needs, suppliers’ demands, the possibility of having new firms in the industry, the threat posed by substitute products and the existing rivalry among the firms in the industry.
When compared to the diamond E drill this method is more effective since the latter is only concerned with the decisions made in the organization.
For effective decision making, the company needs to put into consideration the internal factors that affect its operations since past research on Fortune 500 companies indicate that most of them fail for not putting into consideration external factors when making decisions. External factors are the source of competition as indicated by the porters’ five forces model and this therefore credits this method of strategic analysis over and above the others.
Implementation Plan
As stated in the recommendation above, the best strategy to be implemented by the management is the porters’ five forces model analysis. From this, company will be in a position to influence the methods which it can use to counter the competition from other communications service providers such as Apple and the other mobile device producers such as Motorola, Samsung Nokia, Ericson, and Sony Ericson among others.
From the case study provided, it is clear that RIM has to develop a strategy with which it will be able to subdue all these mobile companies together since most of them are working together. From the supply side, they should ensure that they are dealing with reliable suppliers and ones whose products are unique. The suppliers should also be updated with the market trends and the needs of consumers.
They should always ensure that they are the first company to introduce any new products in the market and that will earn them more credibility in the market. Besides, they should establish a reliable and efficient supply chain system. A concise supply chain system will help the firm lower its expenses thus prompting profits. Further, the firm will be in a position to offer reduced prices to customers as a result of reduced expenses brought about by efficient supply chain technology.
Works Cited
Crossan, Mary, Fry Joseph and Killing Peter J. Strategic Analysis and Action. (7th edition), Toronto: Prentice Hall.2009.
Jones, Gareth and Charles Hill.Strategic Management Theory: An Integrated Approach. New York: Cengage Learning, 2005.
Tavana, Madjid. Strategic Alternative Assessment. Philadelphia: Picsberg press, 2002.