RIM Turnaroud Strategy


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This is a group presentation for the Restructuring and Turnaround Management Class of Fall 2011, Schulich School of Business

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  • This graph doesn’t help to show the urgency!Do we have any Cash Flow Graph that shows how long RIM will last if it went on like this? (Was Munaf doing one?)According to Munaf: cash ratio will be almost zero in approximately 6.5 years at the current decline rate of 15% (can he justify it, if asked?)Can we say: “Current Rate of Cash Burn Coupled with Declining Growth will Put RIM on the Verge of Bankruptcy!” ??
  • No one will be able to read this!
  • No one will be able to read this!
  • Not sure how to fix this one!We also need to show how much these initiatives will cost us and how are we going to fund them!
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  • RIM Turnaroud Strategy

    1. 1. RIM Turnaround Strategy Restructuring and Turnaround Consultant Group Ajay Singh, Binoy Das, Golnar Malek-Saniee, Munaf Tisekar, Yong He
    2. 2. Agenda  RIM Business Definition  Current Situation  Issue Analysis  New Business Definition  Balanced Score Card  Recommended Initiatives  Implementation Plan
    3. 3. Current Business Definition  Founded 1984  1999 - Launches BlackBerry service  Q2-2011 – surpassed 70 million subscribers  2010 Revenue/ Net Income: $14.9 billion / $3.46 billion  Strength lies in offering end-to-end solution through push email on BlackBerry Enterprise Server Historically RIM focused on the enterprise market with a focus on security Business Definition Serving Enterprise and Prosumer Market Customers Governments/Offices/Corporations and Professionals Offerings Secure Platform for Mobile Communication Major Markets North America and Western Europe Delivered via Wireless Carriers
    4. 4. RIM's Current Situation o Declined Operating Performance o Failed to attract consumer's attention o Lost market shares o Faced innovation and technology challenges o “Falling knife” - Stock Market Performance RIMs market share is depleting fast with stiff competition New Subscribers/Quarter turned down New Subscribers added per unit sold Continue to drop Device Gross Margin Gets Thinner
    5. 5. RIM’s Major Issues: SOF-IE SOF-IE Framework for RIM Strategy Operations Finance Internal • Ineffective Governance and Reduced Confidence in RIM’s Management Team • Rigid Organizational Structure • Confused Strategy Leading to Major Slip at the Enterprise • Operational Glitches with Software Delays and BlackBerry Service Outages • Human Resource Challenges • Lack of Processes to Ensure Alignment of Requirements with Product Development • Declining Profitability • Deteriorating Sales Growth • Increasing Operating Costs External • Rapid Loss of market Share in North America • Ineffective Business Alliances & Ecosystem • Falling Behind Industry Trend & Innovations • Lack of Developer Support for BlackBerry Platform Growth • Adverse Impact on BlackBerry Brand Due to Service Outages and Ineffective Government Relations • Over-dependence on a Few Customers • Deteriorating Investor Trust RIMs strategic issues are in high alert zone
    6. 6. Critical Issues o Ineffective governance & unsustainable business model o Lack of ecosystem and falling behind Industry Innovation curve o Declining Operational Effectiveness and Human resource challenges RIM should give immediate attention towards its critical issues Revenue Per BB device sold
    7. 7. Declining Cash Position o Current ratio declined from 3.51 in 2007 to 2.06 in 2011 o Cash ratio declined from 1.81 in 2007 to 0.58 in 2011 o Current assets declined by 1.5 B from prior quarter Current Rate of Cash Burn (15%) Coupled with Fast Declining Growth will Completely Deplete RIM’s Cash Reserves in ~ 6.5 Years! RIMs cash position is poor compared to its competitors
    8. 8. New Business Definition o Nature of Marketplace has changed - Consumer market as important as Enterprise o In both segments, it is not only radio any more - content is the king o Necessary to build on security prowess and develop social communication platform, complete with active app-based ecosystem o Major non-US markets have huge potential, scope to penetrate these markets, paying at respective price points RIM should focus on enterprise as well as retail customers Business Definition Servicing Enterprise & Consumer market Customers Government/Offices/Corporations and Consumers Offering Secure and Social Platform for Mobile Communication Major Markets Asia-Pacific, Latin America, EMEA and North America Delivered Via Wireless carriers, Phone Distributors, BlackBerry Stores
    9. 9. "Customer Intimacy" "Product & Services Leadership" "Operational Excellence" Customer Perspective Process Perspective Learning and growth Perspective Financial Perspective Strategy Map Research In Motion Increase Shareholder Value Productivity Strategy Revenue Growth Stratregy Create Value from New Products and Services Increase Enterprise Market Share Manage Cash for Stratregic Investment Reduce Operating Costs Establish Strongholds in Emerging Markets Retain Customers Improving User Experience Diversify Customer base Innovative Products & Solutions Comprehensive App Store Reliable and funcational BB Serviice On-time Product launches International Expansion Strategic Alliance and Eosystem Customer Satisfaction Retain Developers Sustaining R&D Process Business & Technology Innovation Performance Management Customer Oriented Solution Process Ecosystem Development Process Project & Quality Management Effective Cost Management Integrated Business Development Process Talent Management Media & Government Relationship Increase Marketing Relationship Management Skills Operational Management Skills Successful Career Planning Entrepreneurial and Innovative culture Leadership Development Acquire Companies Right Price Key Employee Retention Strategic Decision making Strategy Map
    10. 10. Balanced Score Card Success Area Measure of Success Target (12 months) Weight Effective Governance The Board of Directors satisfies Best Practices outlined by the North American Corporate Governance Guidelines 100% Separation of Board of Directors from Senior Management 25% Development of Ecosystem and Strategic Alliances Number of Strategic Alliances in Emerging Markets Revenue Generated from Content Services Increase by 100% Double the revenue 25% Increase Market Share of Emerging Markets Market Share in Latin America, Middle East, Africa, India and China Among Top 3 smartphone Players 15% Reduce Development Cycle Time Total time elapsed: From initial concept to time product ready for market 6 Months 13% Actively Manage the Product Portfolio for Superior Innovation Technology Ranking: Independent peer review of current technology capabilities Among top 3 in high-tier, mid-tier and low-tier smartphones 12% Retention of Key Employees Identification and stock ownership for key employees 100% of Key employees covered by stock options 10%
    11. 11. Initiative 1 - Effective Governance o Separation of concerns - make executive management separate from board o Reduce redundancy in management - such as two CEOs doing same job o Evaluate management effectiveness and replace inefficient management o Create healthy operating environment through implementation of reporting and governance systems - monitor key metrics XXXXX
    12. 12. Initiative 2 - Strategic Partnerships o RIM cannot capture all potential value by only enhancing its own internal management mechanism o Strategic partnership is the way to look for complementary strengths to build a highly competent global ecosystem o Give customers unrivalled choice and become market leader XXXX
    13. 13. Initiative 3 - Emerging Market Positioning o Competitive Product Portfolio for price sensitive and spec conscious EME markets o Majority of market share is between $100- $200 price range “Land Grab” Strategy in EMEs to take the leading position o Develop BBM ecosystem o The value of being social @ work and outside o Develop Local Brand and capabilities
    14. 14. Initiative 4 – Reducing Development Cycle o Currently taking too long to bring product concept to market - often giving competitors an upper hand o Centralized Product Management necessary - work with close collaboration with Product Marketing teams o Bring a new idea to production in less than 6 months - that's the pace of the industry o Align product roll-out strategy with business strategy - be the first to roll out new ideas, or a close second at best XXXX
    15. 15. Initiative 5 - Managing Product Portfolio • Strive to be at the top of technology ranking in any category - hardware, software, features, radio communication, security, productivity and lifestyle apps • Jump into “superphone" bandwagon o Ultra-fast dual core processors with over a GB of memory o 128 GB onward flash storage o Multi-touch screen of over 4.3” o 12 megapixel camera o GPS integration o Support for blazing fast LTE and/or WiMax network • Provide an easier and faster user experience o Improved browsing o Voice-activated searches o Personal and corporate content management o Productivity apps XXXX
    16. 16. Initiative 6 - Key Employee Retention o Key employees are RIM's engine for innovative products o Offer competitive salary and benefits to retain key performing employees and avoid brain drain o Cover all employees with a planned stock options schedule to lure them to stay at RIM o Make RIM an attractive workplace as compared to competitors XXXX
    17. 17. XXXX