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4 rim



Business Strategy

Business Strategy



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4 rim Document Transcript

  • 2. I. CASE SYNOPSIS RIM is a world leader in the mobile communication market that establesihed on 1984by 23 year old University of Waterloo student Mike Lazaridis. In 2008 RIM have anexplosive growth. On march 2008, their subscriber already increasing from 8 million to 14million. RIM believe R&D is their strongest success factor. To keep their superiorityperformance RIM should maintain their R&D by several strategy such as Increase theircapability in recruiting and maintaining their new staff, grow and expand existinggeographies, increase strategic acquisitions (find a potential company that will increase RIMcompetitive advantage), Go global (build a subsidiary in other country that have strategicadvantage).II. ISSUES AND PROBLEM IDENTIFICATION The issues and problems that can be identified from RIM case can be seen below :a. What should RIM do to keep the superiority?b. Are their strategy are good enough to keep their superiority?c. Could RIM maintain the resistance when applying their recent strategy?III. ANALYSIS3.1 External Analysis The external analysis is conducted by using PEST analysis and Porter’s Five Forces.(a) PEST AnalysisField ExplanationPolitic Most governments regulated the import and export of encryption product due to national security issues.  The US government would not purchase any product that had not passed the Federal Information Processing Standards (FIPS) certification test.  Data that encrypted in China should provided government the keys to access the data.  India government wants to eavesdrop to Blackberry user due to terrorist issues.Economy  There is a depressed economic climate in the United States that made many smaller firms and technology start-ups were struggling financially.Social  Social phenomenon about blackberry that originally built for business professional and reaches a bigger segment.  Worldwide demand for wireless handhelds due to global trends.  Broad acceptance of e-mail and text messaging as a reliable, secure and indispensable means of communication.  The need of instant messaging for business and personal communication tools.  The worldwide recognition of China as a center of innovation.Technology  Moving demand from cellphones to smartphones.  Commercial availability of high-speed wireless networks.
  • 3. Field Explanation  Emergence of mobile access to corporate intranets.Legal Source code loss, software piracy and product imitation were more common in developing countries where IP protection laws lagged the US or Canada, lead to explicit and tacit knowledge “leakage”. The launch of China product called “Redberry” with wireless e-mail service.(b) Porter’s Five ForcesForces Analysis AttractivenessThreat of New New technology in telecommunication and product imitation UnattractiveEntrants Description: Due to rapid development in technology and technical leakage issues, It is possible for other established company (even beyond telecommunication industry) to enter the market then offering new technology of telecommunication or doing imitation of existing productBargaining More preferences for company Unattractivepower of Description:suppliers Lot of suppliers can provide any instrument or part in term of support the manufacturing, therefore the company has more preferences to select the appropriate product based on consideration of cost and qualityBargaining Easy to shift to other products Unattractivepower of Description:buyers The increasing market of smartphone make each provider penetrate market by any differentiation such as device preferences, customer care, software and accesories. These occurrences make buyers are easier in shifting to other productsThreat of Threat of PC Tablet UnattractiveSubtitute Description:Services Technology of smartphone is not unsubstitutable due to other existing technology called PC Tablet that provide not only more features in smartphone but also add some features inside in PC Tablet characteristicRivalry among High competition Unattractiveexisting Description:competitors In worldwide market share, RIM’s Blackberry OS is under Symbian and Microsoft’s Windows Mobile. Moreover, those providers including Apple, Android and Palm which are penetrate market -by each business strategy even more similar action- make this competition of smartphone market segment become high3.2 Internal Analysis Internal analysis is conducted by using value chain analysis and resource based view(RBV) analysis.
  • 4. (a) Value Chain Analysis The value chain analysis is conducted by seeing RIM primary activities and supportactivities.Primary ExplanationActivitiesInbound Most core work still done in Waterloo and Ottawa.LogisticsOperations  R&D still done in Waterloo.  Product and technology sites throughout the United States and United Kingdom.Outbound  RIM offices in North America, Europe and Asia Pacific.Logistics  Subsidiaries in Delaware and England.Marketing  Sales and marketing representatives offices in France, Germany, Italy, Spain,and Sales China, Australia, Hong Kong and Japan.  Celebrity as brand ambassador.  Partnership with wireless carriers such as Rogers and Verizon that bundled Blackberry handheld and software with airtime.  Improving relationship with large national reseller and on-line distribution while also strengthening their old networks of carrier enterprises and retail channels1.Service  Customer services in Singapore.  Providing 24/7 support for Blackberry customers around the world.  Increase the capabilities in the customer support group by including a professional services organization, an extensive array of educational programs, incident-based technical support team and operational excellence team that focused on regulatory compliance, quality assurance and customer satisfaction.2Support ExplanationActivitiesFirm  RIM has a company culture that was flexibility, adaptability and the ability toInfrastructure work collaboratively that create a nice and dynamic working environment.  RIM built company that focus on quality and has an embedded philosophy of “We can do it better ourselves”.  RIM headquarters are based in Waterloo.Human  RIM recruits their people through local recruiting strategy especially in UniversityResources of Waterloo and also a nationwide campus recruitment.Management  Company relied heavily in the personal and professional network of existing employees as an ear-to-the-ground approach in finding new talent.  Doing co-op programs to other universities.Technology  R&D was the heart and soul of RIM.Development  Improve new application to be used in Blackberry, such as Facebook for Blackberry.  Push technology.  Partnership with software developers to bring popular game, such as Guitar Hero III.Procurement The Blackberry Enterprise System that connect the Blackberry handheld with Blackberry Enterprise System, Blackberry Mobile Data System (MDS), Blackberry Connect Devices, Blackberry Alliance Program and Blackberry Solution Service.1 RIM Annual Report, 20072 RIM Annual Report, 2007.
  • 5. (b) Resource Based View Analysis Resource based view analysis is conducted by seeing the natural and additionalresources in RIM that can be combine to see core competencies and competitiveconsequences.1. Natural and Additional Resources of RIMNo Resource & Valuable Rare Unimitable Nonsubstitutable Competitive Capabilities Consequences1. Location in Waterloo Yes Yes No No Competitive Parity2 RIM reputation in Yes Yes No, but Yes, but to Temporary delivering the safe and need capital segmented and Competitive secure voice and data and long sometime become Advantage transmission (RIM time to negative issue in cryptographic and build market software source code)3 Blackberry Brand Yes Yes Yes No Temporary Competitive Advantage4 RIM R&D and Yes No No No Competitive engineering Parity5 RIM Culture Yes Yes No No, cause very Competitive company have their Parity own unique culture2. Combination and Resource Capabilities in RIMNo Resource & Capabilities Valuable Rare Unimitable Nonsubstitutable Competitive Consequences1. Location in Waterloo, Yes Yes Yes Yes, but need to Sustainable RIM R&D and consider with the Competitive engineering and RIM RIM rapid growth Advantage culture in market2. RIM reputation and Yes Yes Yes No Temporary Blackberry Brand Competitive Advantage3.3 Alliances and Partnership Analysis In the case of RIM, to keep the Above Average Return position is depend on how todevelop their R&D function. In term of strategic alliance and partnership, RIM focus on howto create alliance and partner that will keep resource and capabilities of RIM’s R&D as theirsustainable competitive advantage. To do that, first we study the key that will determinedRIM success factor in single alliance and second how to build RIM R&D capability foralliance success :
  • 6. 1. A Single Alliance in R&D function key Success Factors RIM strategy in R&D function alliance will success depends on how they form it. Toanalyze what key success factor will determined RIM SCA, it will consider RIM approach tomaintain technical superiority that fit the explosive growth of RIM ; 1) Do What we do Now,only more of it, 2) Grow and expand existing geographies, 3) Increase Acquisition and 4) GoGlobal.a. Alliance Formation Phase Although RIM relationship with Waterloo (including University of Waterloo) already fulfill three criteria (complementary, compatibility, and commitment) as partner that have positive influence, its still required other alliance to meet the scope of global operated company. The strategy in this phase: - RIM local recruitment strategy, co-op with University of Waterloo had been very succesfull but for global scope RIM need new strategy. Some strategies that can be use to recruit new talents are, Expand co-op programs to other universities as well as have been implemented in Waterloo, lead a global scouting group dedicated to finding the best talent worldwide and bringing them into RIM, revamping the careers website and being more creative in the way in which they structured recruiting - In established R&D operation beyond Waterloo, must consider that the new location was not haphazard and cost of talent. The criteria in selecting the new location that can fit with RIM: have a pool of talent that housed a mature skill set and have universities with strong technical programs. This criteria also implemented in global expansion Europe, Middle East, Africa (EMEA), and Eastern Europe - With the condition of the economic downturn in US and Europe give opportunity to RIM to make acquisitions, either technology or of software talent. Acquisition to European mobile company help RIM to overcome the European market that highly “nationalistic”.b. Alliance Design Phase Considering about RIM culture in Waterloo and key differentiation in R&D operation there are two way to construct alliance with partners depend on location characteristic. Contractual provisions can be implemented in USA and Europe and a combination of contractual provision with goodwill and trust can be used when dealing with China and East Asia region. Equity ownership can be used when building relationship with European telecommunication market where the market was highly
  • 7. “nationalistic”. Form of the design in this typical of market can be done by partnering with major research institutes or partnering governmental and educational institution. Expanding to emerging markets was complicated due to restriction regarding cryptographic software. Encryption was seen as a “dual-use technology” which could have both commercial and military value and was thus need to be carefully monitored. This technology make RIM have competitive advantage toward competitor but also become obstacle in designing R&D operation alliance. Clear relational contract between RIM and government institution about this is one way to overcome the problem.c. Postformation Alliance Management Phase Problems in this phase is RIM was not set up to manage a multicountry research consortium and the mindset in Waterloo was still very much such that core engineer needed to be seen to be perceived as valuable. So, RIM can manage its alliance portfolio with copying what it has done best in Waterloo as guidance. To build trust and commitment from partner to fit Waterloo culture, need RIM commitment itself to trust the partner in form of sharing the benefit of the alliance.2. Drivers of R&D Level Alliance Capabilities There are two points of view to see strategic alliance that RIM need to do to manage itsexplosive growth. From value chain analysis, it is about to outsourcing their support activitiesespecially the R&D operation. As global operated company to hire very particular mix ofengineers and get new insight about new market will determined company R&D sustainablecompetitive advantage.
  • 8. From resource base view, strategic alliance that RIM do will capture greater experiencefrom resource alliance that will increase the capabilities of R&D organization. RIM alliancein Waterloo had shift from Sustainable Competitive Advantage to Temporary CompetitiveAdvantage because competitors had done the same strategy, even move to the next step bymake strategic alliance through joint venture, acquisition, partnership, and etc.IV. CONCLUSION AND RECOMMENDATION4.1 Conclusion RIM’s culture could create high significant impact of company’s profitability. Despiteof its core competences, RIM is quite success in term of did the recruitment strategy withWaterloo University and acquires Slangsoft. Maintain RIM’s culture and acquire theappropriate company in order to expand the market have made the positive impact evenincrease significantly due to its profitability.4.2 Recommendation Creating RIM’s culture is one of its strength, however RIM has to realize thatcompetitors did the similar ways. RIM’s core competences may be concluded as sustainablecompetitive advantage, however it is very possible in shifting to be temporary due toaggresive strategy by competitors. Due to explosive growth and as a big enterprise, RIM mustact globally. RIM need to build an alliance division that will manage RIM alliance portfolio.With alliance division capability, RIM can capture, store alliance management lesson andbest practices and make the alliance they have done to become firm experience. Alliancedivision also will built commitment, trust from its alliance and better coordination betweenRIM and its alliance. Transfer knowledge can be share effectively through alliance function.To maintain RIM R&D culture, RIM can appointed Waterloo to be RIM alliance divisionheadquarter.V. LESSONS LEARNEDLessons learned that can be taken from this case are : Growth strategy should be based on limitation of capability and opportunity to achieve more benefit by combine resource and capability from other party. In implementing strategic alliances the company need to consider not only operational factor but also the of work culture among parties, therefore the alliances could achieve compatibility, complementarity and commitment.