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blackberry turnaround strategy

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blackberry turnaround analysis and factor to be considered for implementing different strategies for the success of blackberry.

blackberry turnaround analysis and factor to be considered for implementing different strategies for the success of blackberry.

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  • 1. Capstone Presentation Submitted By: Abhishek Gupta (01) Abhishek Mehrotra (03) Devanshu Gupta (19) Giteshwari (23) Toushi Godra (92) BlackBerry Turnaround Strategy
  • 2. Industry Analysis • Main factors influencing the Smartphone industry in 2013: i. Relationships between platform leaders and hardware manufacturers. ii. Market demand and carrier support. iii. The decisions of a number of major players with regard to key transitions or major trends. • • • Google control over Anroid OS. Fall down of Nokia Smartphone's sales. Indian Mobile Market.
  • 3. Threat of New Entrants Porter’s 5 forces for Smartphone Industry •The fixed cost of R&D on software and hardware •Loyalty for patents and other intellectual property rights •Need for good talent and manpower •High initial investment is required Bargaining Power of Supplier Intensity of Rivalry •Majority of Hardware used to produce a smart-phone is same, like ARM architecture processor, same storage and gorilla glass screen •Product attributes like features and design can be quickly imitate or encounter with better quality or advance specification, like camera, touch screen resolution, processor and storage, connectivity and even software bundle •Relative concentration fall into competitive as equal many buyer to supplier Threat of Substitute •Tablet is likely to substitute smart-phone as it share similar interface, functionality and apps •Cross price elasticity is high, maily from featured phone. Consumer may only need a featured phone with basic call and text. Bargaining Power of Buyer •Consumers have a lot of choice available in the market •Switching cost is low •Many suppliers are providing varied features and apps •Many buyer to suppliers increases the bargaining power
  • 4. Change in Global Smartphone’s Market Share from 2009-12
  • 5. Countries Smartphone’s Shipments (in millions) and Market share
  • 6. Company Analysis •BlackBerry Limited, formerly Research In Motion Limited, incorporated on March 7, 1984, is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. •Company's primary revenue is generated by the BlackBerry wireless solution, consists of smart phones and tablets, service and software. •BlackBerry pioneered Push Email. •BlackBerry’s Product Portfolio. •BlackBerry co-CEOs Jim Balsillie and Mike Lazaridis was replaced by Thorsten Heins in January 2012.
  • 7. SWOT Analysis of BlackBerry Strength • Strong relationship with more than 650 carriers around the globe • More than 72 million loyal customer base • Core Competency in security encryption feature • QWERTY keyboard ease the typing experience • It is a preferred enterprise phone with 14 mn+ customers Weakness • Slow response rate to competitors • Outdated OS 7 phone with poor interface and usability, still present in the market • Lack of apps when compared to Android and Windows • Lacks clear positioning • Took too long to introduce OS 10 • High price of OS 10 phone
  • 8. SWOT Analysis of BlackBerry (Contd..) Opportunity • Smart-phone market growing at a rate of 41.7% annually • Strong growth of mobile advertising market • Better competence of OS 10 when compared to other leading mobile OS • Overwhelming acceptance of BB 10 in India, Canada, UK and Indonesia Threat • Competition from market leader that has already achieved economies of scale • Challenges from Nokia which after being acquired by Microsoft can come up with strong differentiated products • Rapid technological changes • Stiff competition may quickly burn retained cash in hand of blackberry
  • 9. Analysis • Both the Smartphones as well as tablets fall under Dog quadrant of BCG matrix. “Dog” quadrant has a typical investment stance or “Harvest/Exit”. • In reality though, it will not make sense to divest or exit businesses rapidly in this quadrant beacuse they will have low value and will distract management during the sale process. • Frequently their weak competitive position leaves them incapable of being “harvested” either – if investment is reduced they may disappear very quickly. • Rather they could be set up to operate with minimal resource drain on the rest of the portfolio, as the best people and all discretionary resources are diverted to more attractive businesses.
  • 10. Objective of the Study • Blackberry’s smart phone market share declined by more than 33 % and the company is losing its core so the objective of our project is to frame a turnaround strategy for blackberry which would help it to recover and get back at its position. Outcomes Expected •Acknowledging the loopholes in the strategy placed by blackberry for its smart phones •Reasons for its failure •The appropriate strategy that should have been framed by the company •How the ill-effects of the strategy placed can be mitigated so the company would be able to recover and then frame a suitable & turnaround strategy.
  • 11. Marketing Issues with BlackBerry • Blackberry lost its original image as a Smartphone producer • Diverting attention and resources to Playbook • Failure to produce new smart phones for almost an year • Company found it difficult to position their product when iPhone and Android started dominating the market • Failure to produce and promote new apps
  • 12. Strategies to Turnaround • Success of BBM can be used to brand Blackberry products • Focusing on its original image; business communications for business people. • Going with the strategies implemented by John Chen. Retaining him for a long time. • Moving towards Emerging markets. • Marketing the “Security Features”.
  • 13. Financial Issues with BlackBerry • The revenue of the company had slipped by 26% approx. • The company has increased its R&D budget by 56% . • Company had suffered operating losses in 2013. • Company is also receiving net losses for 2013. P&L and Ratio Analysis
  • 14. Balance Sheet • Blackberry is a debt free company . • Intangible assets had increased by 160% from 2010-2013 . • Fixed assets had declined by 12.36%.
  • 15. Ratio Analysis Profitability Ratios 2013 2012 2011 2010 Gross profit margin (%) Net profit margin (%) Return on Equity (%) Return on total Assets (%) EPS in ($) -31 -5.83 -6.83 -4.90 -1.23 35 6.32 11.52 8.48 2.2 44 17.13 38.16 26.50 6.36 44 16.43 32.32 24.07 4.35 Liquidity Ratios 2013 2012 2011 2010 Current ratio Quick Ratio Cash Ratio 2.06 1.88 0.77 2.09 1.78 0.52 2.06 1.89 0.58 2.39 2.12 0.79 Activity Ratios 2013 2012 2011 2010 Inventory turnover Fixed assets turnover Total assets turnover 18.36 4.62 0.84 17.94 6.74 1.34 32.21 7.95 1.55 22.65 7.64 1.46
  • 16. RAISING $1 BN • Firstly to be bought at $ 4.7 bn by Fairfax Financials. • Prem Watsa’s Fairfax Financial, which holds a 10 per cent stake. • Abandoned $4.7bn rescue bid as it turned to a $1bn fundraising plan. • Will raise $1bn in convertible bonds.
  • 17. PLAN OF THE COMPANY
  • 18. HR issues in Blackberry •Dual CEO structure •Heavy layoffs. •De-motivation among employees •Inefficient employees. •Growth hampered.
  • 19. Strategies to Turnaround •Reassure the people of their value to the organization. • Employee security. • Step up. • Compensation & Rewards.