1. Diversified Communication Services
2nd Industry Report
Pacific Lutheran University School of Business
BUSA 499 - Capstone
Industry Value Chain
1. Research & Development: This is where the starting point is. New ideas are thought up in this phase
and from here they are put into action.
2. Metal, plastic, and chips are the starting point for a new phone being created. These materials are
necessary to make the basic phone in itself.
3. Different parties are consulted on what they think of the idea and how the phone can best be
4. Companies supply these raw materials to the organization
5. The technology behind these is developed. Programmers enable the phone to have software and it is
decided whether the phone has is an open or closed source. The phone is designed.
6. The raw materials are then produced into the physical phone.
7. The phone is marketed to the public.
8. The carriers distribute their phone either through their retail stores or online.
9. The product is delivered to the customer.
Research in Motion Limited (Eva Collins)
3. Resources Identification
The company Research In Motion (RIM) is known for their BlackBerry devices that allow users
to be connected to time sensitive materials. RIM is organized and managed as a single reportable
business segment, which is categorized into four divisions: devices, service, software, and other
(Datamonitor, 2008). RIM holds both tangible and intangible resources that are important to their
capability to provide quality products to their consumers. Located in Waterloo, Ontario, RIM’s
corporate headquarters sits on approximately 1,141,685 square feet, which houses a multitude of
operations and departments (Annual Information Form, 2008). They are not solely located in Canada,
but lease facilities throughout America and Europe. Within RIM they must have the financial stability
to pay for their incurred expenses such as cost of goods sold, labor, and these facilities. The first of
March in 2008, RIM recorded that they had a net gross of $412,501, which was 21.9% of the Revenue
made from sales (Annual Information Form, 2008). With this being said, RIM was able to pay all of
their current expenses and investment activities in the year of 2008. In order to continue their success,
“RIM has sought to protect the technology that it has developed through a combination of patent,
copyright and trade secret protection as well as through contractual arrangements” (Annual Information
Form, 2008). Along with these tangible resources, there needs to be intangible resources to complete
For any research and development company, it is important to have the best knowledge to
produce products such as the BlackBerry. “The Company’s success is largely dependent on its
continuing ability to identify, attract, develop, motivate and retain skilled employees” (Annual
Information Form, 2008). With approximately 2,900 employees there has to be key players to ensure
that they are continuously motivating and retaining these skilled employees. This ensures that their
knowledge and abilities are used to create value for the company when developing new products. “As
President and Co-Chief Executive Officer of Research In Motion (RIM), a company Mr. Lazaridis
founded while a student at the University of Waterloo, he is responsible for product strategy, research
and development, product development, and manufacturing” (Datamonitor, 2008). The other Co-Chief
Executive Officer, Jim Balsillie, is more in charge of the internal business strategy and departmental
functions. RIM also has six Non-Executive Board Directors, as well as, six Officers in Senior
Management. These directors and managers have a strict focus on either a department or an aspect of
the product development and branding (Datamonitor, 2008). In order to obtain these key employees
and others, it is important to look at their Human Resource practices.
Human Resource is the source for creating a corporate culture and preserving and developing
employees’ skills. In 2006, RIM was awarded Canada’s Most Admired Corporate Culture (RIM,
2009). It is present in the rewards and benefits they provide to their employees why they would be
awarded this from their free BlackBerry device, pay and incentive program, training and development
programs, and even a work environment that offers wellness programs (RIM, 2009). Along with this
training, a code of ethics is available to all employees to ensure that financial regulations,
confidentiality, and protection of RIM’s assets are upheld. The employees’ responsibility includes
helping to create and maintain a culture of ethical standards and commitment to compliance, and, in the
case of directors and officers, maintaining a work environment that encourages employees to raise
concerns to the attention of management, and promptly addressing employee compliance concerns
(RIM, 2009). Intellectual property is also directed in the code of ethics, ensuring that employees are
responsible for protecting them.
Innovation is the key to any technological company. “Through the development of integrated
hardware, software and services that support multiple wireless network standards, RIM provides
platforms and solutions for seamless access to time-sensitive information including email, phone, SMS
messaging, Internet and intranet-based applications” (Annual Information Form, 2008). RIM is known
for their strong development capabilities, which is visible in their increase of their research and
4. development expense from 2006 to 2007 (Datamonitor, 2008). The research and development expense
has continued to increase in 2008 from $236,173 in 2007 to $359,828. “RIM technology also enables a
broad array of third party developers and manufacturers to enhance their products and services with
wireless connectivity to data” (Annual Information Form, 2008).
Reputation and branding is incredibly important for a company to market their products. RIM
“has had a stellar run with the BlackBerry family” (Carey, 2006). In today’s phone market,
“BlackBerrys have garnered an almost mythic stature as the phone for email and messaging”
(Topoisky, 2008). This passion for all-time connection is the reason why people love their BlackBerry.
“The degree to which government relies on such tools was recently highlighted when President Barack
Obama fought to keep his Blackberry after he took office (albeit with high-tech government security
tools installed)” (Rosen, 2009). The BlackBerry has become an asset to any company or person who
uses it to stay connected at all times, depending on its efficiency to communicate with others quickly.
“RIM intends to maintain its position as a market leader by focusing its sales and marketing efforts on
the continued use of strategic alliances and relationships to promote the sale of its products, as well as
utilizing indirect sales and marketing teams” (Annual Information Form, 2008). With marketing costs
of $74,034, this has steadily increased over the years to ensure that consumers are aware of the
products and services RIM provides in the market.
Offering over 25 different models of the BlackBerry, consumers can pick and choose to their
hearts content. “BlackBerry smartphones are available from over 200 carriers and are designed to
operate on a variety of carrier network types, including GSM/GPRS/EDGE, CDMA/Ev-DO, iDEN,
UMTS and Mobitex” (Datamonitor, 2008).
The newest editions to the line include the BlackBerry Curve, Storm, and Bold. Each allows users
different capabilities, as well as a unique look. The BlackBerry Curve “is the smallest and lightest full-
QWERTY Blackberry available to date. As compact as a cell phone, it has a wider body and a full
keyboard for fast messaging. Cutting edge multi-media capabilities separate the Curve from earlier
models” (Caster, 2009). Sadly, the most anticipated BlackBerry, BlackBerry Storm has received some
poor reviews. The Storm’s main difference to any other BlackBerry is its touch screen, which clicks
with its SurePress technology. Yet this same technology is not helpful in the way the software reacts to
navigating with your finger and typing has become a tedious process (Topoisky, 2008). But, “When it
comes to sound quality and reception for making actual phone calls, you can't beat this combination.
RIM phones generally have loud and clear earpieces and speakerphones, and Verizon -- love it or hate
it -- has a great network” (Topoisky, 2008). The most related to the old models of BlackBerry, the
BlackBerry Bold “works and plays just like every other BlackBerry, but with a load of small-to-
medium improvements, updates and tweaks that add up to a richer, more refined phone that also looks
far better than the rest while doing its thing” (Buchanan, 2008). The BlackBerry bold at its
manufacturing cost and the $169.41 BOM, appeals to both corporate and consumer users (Cellular
News, 2008). Their models all come with a basic setup that includes a full text keyboard, camera,
phone, email, messaging, instant messaging, GPS and music. BlackBerry also allows “access to files in
Microsoft Word, Excel and PowerPoint” (Smartphone Technology, 2009). The BlackBerry is not
solely for the PC user, but can be synchronized to a Mac and allows applications to be uploaded. RIM
provides this application software to allow synchronization to a computer or laptop. Along with
application software and the BlackBerry devices, Rim offers; BlackBerry wireless platform, Smart
cards, embedded radio modems, and software development tools (Datamonitor, 2008).
Research In Motion Limited Value Chain
Inbound Operations Outbound Marketing Service
Research In Motion Core Competencies
Based on these resources and capabilities, RIM has been able to place themselves as the second
largest supplier of smartphones. Comparing RIM to their competitors, such as Nokia who holds 1st
place as the largest supplier of smartphones, and Apple’s iPhone consumer popularity, they have a few
core competencies that make them a strong designer, marketer, and manufacturer.
V RIM is able to sell their BlackBerry devices
to over 200 carriers, which can run on a
multitude of networks.
R The Verizon network has the largest 3G
network enabling the ability of the
BlackBerry Storm to excel in time sensitive
I Gaining contracts into these carriers may be
costly for competitors, allowing RIM to have
a strong hold on Verizon.
O Marketing is a large part of the RIM.
Having the ability to advertise their products
across different networks allows larger brand
recognition around the world.
V Other businesses and the government have a
huge buying power. They are able to afford
6. BlackBerrys in bulk and the cost of joining a
R RIM’s software is customizable for each
business, allowing a complete package with
the BlackBerry provided to employees.
I A Business’ relationship is already built with
RIM, making it harder for competitors to
enter. If a business choose to switch to a
different smartphone provider, the switching
cost would be high.
O Employees being connected to their business
at all times allows for effective and efficient
V Consumers have the opportunity to choose
from a large selection of BlackBerry models.
R Other competitors offering smartphones only
have one type of model.
I Their competitors could easily imitate
O RIM can market these different models to all
types of consumers, which can lead to a
bigger market share.
Google (Kelsey Andersen)
Google has a wide variety of resources both tangible and intangible. One of their tangible
resources has to do with their financial situation. The company has a great amount of equity to keep
them afloat in hard times. They have a significant net income of over four billion dollars (Yahoo
Finance). According to Google’s website, they make most of their money from advertising. Companies
of all sizes call upon the services of Google to help their business get more attention. Google has
hundreds of thousands of customers who pay for their advertising services. They offer this service
through their AdWords program (Google, 2009). Google also offers such services as Google Analytics
which offer companies help with Marketing Research. As a result of the hundreds of thousands of
customers Google has, they have lots of resources to generate internal funds through.
Google’s largest tangible resources consist of their technological capabilities. The technology
they have created regarding search engines and their technological infrastructure is said to be their key
strength (Datamonitor, 2008). The companies PageRank technology is what makes their search engine
work. Also, their Googlebots crawl over the web to help find information for the search engine.
According to Datamonitors, Google company profile, Google is “believed to have the largest
searchable index among all search engines.” (2008) Also, Google has been able to secure rights to
their PageRank technology which gives them a competitive advantage. Google’s technological
infrastructure also is one of their key strengths. Google has “an estimated 450,000 servers” that are
7. “arranged in racks located in clusters in cities around the world”. Through this they are able to deliver
superior service world wide (Datamonitor, 2008). Through their technological infrastructure they have
been able to continually expand and create more resources such as Google Maps and Google Earth.
Google has been able to place themselves all over the world both through both their physical
locations their servers. Google has locations all over the world. They have 15 locations in the United
States including their main headquarters in Mountain View California. They also have locations
globally in Canada, India, Japan, Australia, Ireland, Great Britain, Brazil, Denmark, Finland, France,
Germany, South Korea, the Netherlands, Spain, Switzerland, Italy, Mexico, Norway, Sweden, and
Turkey (Datamonitor, 2008). Google has a very relevant and important advantage by having locations
all over the world. Because of the fact that the world of business is operating on a global scale as
opposed to each country operating independently, this is a very pertinent physical resource that Google
Google has many intangible resources that work in their favor and help give them the
competitive advantage. One intangible resource that they have has to do with their organizational
culture. The last two years they have been listed on Fortune as the number one best company to work
for (Levering & Moskowitz, 2008). Google strives to have a culture that emphasizes teamwork,
communication, creativity, and innovation (Schmidt & Varian, 2009). One way in which they do this is
through making sure to higher the exact right type of employees. Google is willing to wait for as along
as it takes to find the right employee to fit the job qualifications and company culture (Logan, 2008).
Google also makes sure to give employees enough flexibility in their work schedule that they have
opportunities to think of new ideas and focus on areas that they prefer (Logan, 2008). As a result, they
have a very talented and innovative group of people which helps them develop more technology and
gain a competitive edge. Google’s company culture helps to foster innovation, another intangible
resource. Google’s employees are encouraged to think outside of the box and come up with new ideas.
Also, because of the technological resources that Google has, they have already have a platform that
helps them continue to innovate and come up with new and different kinds of technology. Google’s
corporation contains some brilliant minds. They have a significant resource when it comes to some of
the knowledgeable people that work there. This includes their founders Larry Page and Sergey Brin
along with their CEO Eric Schmidt. Page, in 2002, had the honor of being named World Economic
Forum Global Leader for Tomorrow, Brin has a specific interest in research and Schmidt “led the
development of Java.” (Google, 2009) Great companies are generally made up of great people.
Google is definitely an example of that.
Another very significant intangible resource that Google has is their reputation. Google is
widely known and used all over the world. According to an article in Advertising Age, Google was
ranked as being perceived as the most reputable by consumers. (Bush, 2008) Having consumers trust is
very important because that is what will motivate them to continue using their services. Also, if people
perceive your company as reputable and trustworthy they will be more willing to try out new
technology that is created. Having a good reputation is especially important when it comes to the kind
of business that Google is in. With privacy concerns as well as concerns about downloading specific
applications onto a personal computer, it is important to have the trust of your customers. Google
appears to have a grasp of the importance of keeping up their good reputation. According to an article
on Fastcompany.com, “Google understands that its two most important assets are the attention and trust
of its users” (Hammonds, 2007). It is clear that Google’s reputation is one of their most important
8. Capabilities Identification
Clearly, Google has a lot of resources to help them have a range of capabilities. Many of these
capabilities will be implemented into their new Smartphone, the Android. Because of the wide range
of technological capabilities, their phone will be unique which will help give them a competitive
advantage in the Smartphone industry. Google has used their technological resources to input many
applications on their phone. For example, they have used their in search capability technology to create
a “One-Touch Google Search” which is continually at the top of the screen of the phone and allows the
user to get a quick answer to any question they have. It even allows people to search within their phone
for information or media files (Feature Details, 2009). They have also implemented their technology
into this phone by having superior web browsing technology. The phone contains a QWERTY
keyboard, a touch screen, and a trackball which make it easier to surf the web. They also say that the
web that you see on the screen is the “real web, not the mobile version” and that the phone was
specifically “built to browse the web” (Feature Details, 2009). Google has used their technology to
make the phone extremely fast. The phone offers a “high-speed 3G network” and can “connect to open
Wi-Fi networks automatically” along with offering instant access to Google applications such as
GoogleMaps and GoogleTalk (Feature Details, 2009). Google also has very significant competencies in
Web2.0. This can be seen in the recent release of Google’s Chrome browser. Chrome is open-source
and is said to be extremely fast (Haque, 2008). In time, this new browser will most likely be
implemented into their phone. Given the culture of Google which fosters innovation and new
technology, we will continue to see more capabilities emerge from Google.
Google’s Value Chain
9. Inbound Operations Outbound Marketing Service
Google’s Core Competencies
V Google only hires the best and the brightest.
They focus on hiring people who want to
work as a team with other Google employees
in order to help bring their company new
ideas and value.
R Google’s culture is rare in that they allow
many perks and benefits to being a part of
their company that other places do not offer
in order to help foster innovation.
I This is difficult to imitate simply because
Google’s culture is very unique and a
company’s current culture is difficult to
change. Google has made number one on
Fortunes best companies to work for twice.
O Google works hard to use their culture to the
best of their advantage. They offer an
environment where everyone’s ideas are
welcomed, encouraged, and at many times
put to use.
V Google’s PageRank technology and
Googlebots are very valuable. This
technology is what makes Google’s search
engine more powerful and accurate than
R Google’s PageRank technology is their
intellectual property that no other company
has access to.
I Their technology is difficult to imitate
because no one else has access to how it is
done because it is Google’s intellectual
property. It is also difficult to imitate simply
because of the number of locations that
10. Google has servers.
O Google has used this technology to their
advantage. They have used it to make their
search engine of the best. They have also
used it to help them create other
technologies such as GoogleMaps.
V Google has been ranked the highest in the
amount of consumer confidence is put in
their company. This is important in this
industry as a result of privacy concerns as
well as concerns regarding downloading
R In today’s world, with scandals in such
corporations as Enron, an organization
having high consumer confidence is
relatively rare and is something that can be
I Gaining consumer confidence is something
that is not done easily and is done over a
long period of time. This is not something
that can be easily imitated by other
O This competency is going to work to
Google’s advantage because consumers will
be more willing and interested to try
Google’s new products. In particular, this
may come to their great advantage with their
new Android phone.
Nokia (Ryan Billdt)
Nokia is very heavily invested in R&D and considers this one of their most important success factors.
They have R&D centers in 10 countries and have approximately 14,500 (32% of their whole
workforce) employees dedicated to R&D. They spend about 9.5% of revenues on R&D (these are 2007
figures) Nokia also maintains global contacts to monitor and influence developments in technology.
These global contacts include universities, research institutes and other companies. Nokia also has ten
11. Nokia Research Centers around the World (All descriptions of NRC’s are from source, Nokia, Nokia
Research Centers Locations and descriptions of NRC’s).
NRC India, Bangalore
The NRC India team focuses on emerging market services for both urban and rural India. They
collaborate with Universities such as Srishti School of Art, Design and Technology in Bangalore and
the MIT Media Lab in Cambridge USA. The goal of NRC India is to explore user centered
technologies for the purpose of creating opportunities for Nokia in India and other emerging markets.
Research focus: New User Interface
NRC China, Beijing
Set up to best take advantage of the largest mobile market, and the fastest growing economy, China.
They work with Tsinghua University in a joint effort to research topics of context computing
architectures, context data modeling and management, and mobile social networks.
Research focus: Rich Context Modeling, New User Interface
NRC Cambridge, UK
This NRC libratory is located in the University of Cambridge. They develop nanotechnologies for
wireless communication and ambient intelligence. To be more specific they “[Study the] physical,
chemical and biological phenomena and manipulation of matter at the nanoscale [which] enables
generation of knowledge for enhancing human capabilities.”
Research Focus: High performance mobile platforms
NRC Cambridge, USA
This NRC works closely with MIT to develop new technologies for rich context modeling and new
Research focus: Rich Context Modeling, New User Interface
NRC Helsinki, Finland
They work closely with the Helsinki University of Technology. They study the fields of fields of user
experience, mobile security, power management and computing architectures, as well as intelligent
context-aware radio or “cognitive radio.”
Research focus: New User Interface, High Performance Mobile Platform, Cognitive Radio
NRC Hollywood, USA
They are located in the center of the media industry. They work with members of the Media and new
technology companies, as well as universities such as University of California at Los Angeles and the
University of Southern California. Their research activities focus on activities in context aware social
media, mixed reality experiences, user interaction models, and the convergence of the Internet and
Research Focus: Rich Context Modeling, New User Interface
NRC Lausanne, Switzerland
They work with the Ecole Polytechnique Fédérale de Lausanne (EPFL) and ETH Zürich to research the
field of pervasive sensing and computing.
Research Focus: Rich Context Modeling
NRC Niarobi, Kenya
12. They focus on understanding the unique needs of the African mobile phone user and create concepts
and visions to fulfill these needs. They work closely with groups such as UNECA, Plan International,
Slum Code, Makerere University (Uganda), University of Nairobi (Kenya), University of Cape Town
(South Africa) to solve the unique African languages, cultural, educational and infrastructure
challenges which can be improved by mobile technologies.
Focus: User Interfaces
NRC Palo Alto
This NRC is located in Silicon Valley and Collaborates closely with Stanford University and the
University of California at Berkeley. Their research focus consists of mobile Internet services systems,
mobile business solutions, context-specific content, visual computing and ubiquitous imaging to
enhance user friendly technologies.
Focus: Rich Context Modeling, New User Interface
NRC Tampere, Finland
Their research focus is on Rich Context Modeling, New User Interface, and High Performance Mobile
Nokia is the largest phone manufacturer in the World. In 2007 Nokia’s market share broke 40% which
was mostly feed by their sales growth in emerging countries such as India and China (Poropudas,
2008). In India alone, 125 million phones were produced between 2006 and 2008(Niyaz, 2008). Nokia
controlling 40% of the global market for Mobiles gives them huge customer recognition that other
companies might not have. There market power also gives us hints to many of their capabilities that I
will delve into in the capabilities section.
Nokia has production facilities that focus on Mobile devices in most continents around the globe. Their
locations are: Brazil, China, Finland, Great Britain, Hungary, India, Mexico, Romania, and South
Korea. In addition to these production facilities they also have factories dedicated to making network
technologies in China, Finland, Germany, and India.
The Devices unit is responsible for developing and managing Nokia’s mobile device portfolio,
including the sourcing of components. Nokia is focusing on increasing consumer Internet services, in
five areas—music, maps, media, messaging and games—along with delivering these in a quickly to
consumers. The Services unit is responsible for developing this part of Nokia’s business (Nokia,
Connecting People, structure).
The Markets unit is responsible for the management of Nokia’s supply chains, sales channels, brand
and marketing activities (Nokia, Connecting People, structure).
Nokia Siemens Networks (NSN) provides wireless and fixed network infrastructure, communications
and networks service platforms, as well as professional services to operators and service providers
(Nokia, Connecting People, structure).
NAVTEQ is a leading provider of comprehensive digital map data for automotive navigation systems,
mobile navigation devices, Internet-based mapping applications, and government and business
13. solutions. NAVTEQ’s map data will be crucial to Nokia Maps service that brings downloadable maps,
voice-guided navigation and other context-aware web services to phones (Nokia, Connecting People,
Huge capacity: Being the world’s number one supplier of mobile phones, it would be safe to
assume that their capacity to produce mobiles is larger relative to that of the competitions. With their
numerous factories around the world, they are in a great position to meet world demand. They have
also been focusing on increasing capacity of their factories in emerging countries such as China and
India to meet the growing demand there (Niyaz, 2008).
Cost considerations: Having the largest market share in the mobile phone market also gives us
hints to how cost effective Nokia’s production is. For example, it is likely that Nokia is experiencing
huge cost savings for economies of scale through serving over 40 percent of the market.
Human Capital: Nokia has numerous research centers around the world that work closely in
conjunction with Universities in those geographies (see R&D in resources section). These research
facilities have a focus on studying new technologies to better prepare the company to compete well into
the future. These research facilities and Universities will provide large pools of capable individuals
who have a focus of technology and innovation. These NRC does also give Nokia the ability to mold
the future with innovative ideas. The diversity of these locations will allow Nokia to benefit from a
more global perspective.
Nokia’s Value Chain
Inbound Operations Outbound Marketing Sales
Nokia’s Core Competencies
One core competency is Nokia’s ability to mass produce products quickly and cheaply to meet world
demand. We can see that they have captured almost half of the total market share for Mobile phones.
This is astounding and not easily replicable for existing players and possible new entrants.
Innovation: Nokia has ample research centers around the world working closely with top prestigious
universities. The research facilities all have focuses on specific subjects and technologies. Since the
mobile phone industry is very technologically intensive, having these facilities will help Nokia compete
well into the future by creating new products and services for customers.
Microsoft (Tyler McCurry)
This internal analysis of Microsoft will focus on their operations in the Diversified
Communication Services industry. The following sections will identify and discuss Microsoft’s
resources, capabilities, value chain, and core competencies that relate to their ability to compete and
14. operate in the Diversified Communication Services industry. Microsoft’s main product line allowing
them to compete in this industry is their Windows Mobile operating system.
One of Microsoft’s most meaningful resources is their highly developed network of research
facilities located around the world. Microsoft operates a number of research labs located in Beijing,
Cambridge, Bangalore, New England, Washington, and Silicon Valley.
Microsoft’s research lab in Beijing, China was founded on November 5, 1998. The goal of this
facility is to, “attract the most talented researchers in the field of computing and become one of the best
computer science laboratories in the world”. Researchers from this facility have published more than
3,000 scientific papers for a number of prestigious international journals and conferences. This facility
has produced more than 260 research discoveries that have been used in a variety of Microsoft’s
products. This research facility has more than 350 research scientists and engineers and host more than
400 additional scientist and students from china and around the world (Microsoft Research Asia, 2009).
The Cambridge, England research facility was founded in July of 1997 and was Microsoft’s
first research facility located outside the United States. Today, this facility employs more than 100
researchers and works in collaboration with a large number of research partners throughout the UK,
Europe, and other surrounding areas. The Cambridge facility focuses its research on, “advancing
computer science and developing novel computational approaches to further scientific research in areas
as diverse as machine learning and abstract programming techniques and models through to computer-
mediated living at home and at work, and biological, ecological and environmental sciences.” Another
focus of this location is collaborative research with various universities, governments, and commercial
institutions located throughout Europe (Microsoft Research Cambridge, 2009).
Microsoft’s third foreign research facility is located in Bangalore, India and was founded on
January 12, 2005. This location employs more than 850 scientists and strives to be among the best
computer science laboratories in the world by continuing to attract the most talented researchers in the
field of computing. This location’s primary objective is to, “to conduct long-term research in both basic
and applied areas; collaborate with Indian research institutions and universities as part of Microsoft’s
ongoing commitment to accelerating innovation in computer science and software engineering; and
engage with partners in industry, academia and government to open new opportunities for economic
growth and consumer choice” (Microsoft Research India, 2009).
Microsoft’s Cambridge, Massachusetts facility was founded in July of 2008 and currently
employs over 850 scientists. The Massachusetts research facility’s mission is, “to become a leader in
the interdisciplinary approach to basic research by uniting the more mathematical sciences such as
theoretical computer science, physics, and mathematics itself with other sciences, including social
sciences such as economics, sociology and psychology, and the biological and biomedical sciences”
(Microsoft Research New England, 2009).
The Redmond, Washington research facility was established in 1991 as a part of Microsoft’s
main campus and corporate headquarters. Researchers at the Redmond lab focus on a wide variety of
research topics including new hardware designs, artificial intelligence, HIV vaccine development, and
the theoretical mathematical underpinnings of computer science (Microsoft Research Redmond, 2009).
Microsoft’s final research facility is located in California’s Silicon Valley. It was founded in
August of 2001 and focuses on, “advancing the state of the art in distributed computing and related
fields, while strengthening the architecture and technology of Microsoft products.” The scientists and
engineers at this location also work in collaboration with a number of nearby universities including
Stanford University, the University of California at Berkeley, the University of California at Santa
Cruz, and others (Microsoft Research Silicon Valley, 2009).
Another valuable resource for Microsoft is their high degree of brand recognition among
consumers. This is due to the company’s long standing position as a dominant player in the computer
15. software market and the great success of their Windows operating system. Evidence of this can be
found in an article by PC Magazine published on March 2, 2009. This article reported that Microsoft’s
Windows operating system is the most commonly used operating system with 88.42% market share
(PC Magazine, 2009).
One of Microsoft’s major capabilities is their ability to develop new products and to improve
existing ones. This is made possible by Microsoft’s highly developed network of research facilities
located around the world and the diverse staff of scientist and researchers working at these locations.
Another capability of Microsoft is their ability to obtain new talent. This ability comes from
Microsoft’s reputation as a good employer and their close work with educational institutions. In 2008
Microsoft was named the 86th best place to work by Fortune magazine (Fortune, 2008). Microsoft’s
collaborative work with educational institutions and the high number of internship positions they offer
have also aided Microsoft in the identification and hiring of new talent.
Microsoft also has a highly developed product distribution network, with their products being
offered at virtually all electronics retailers and at the newly created online Microsoft Store. Microsoft is
also preparing to open a chain of brick and mortar stores that will be owned and operated by Microsoft.
They have chosen to do this in order to compete with the highly successful Apple Store (Holwerda,
Company Value Chain
Infrastructure Financial Accounting Legal Matter Management
Inbound Operations Outbound Marketing Service
V The majority of Microsoft’s operating
income comes from the sale of their
R Microsoft’s highly developed network of
programmers and researchers gives them the
rare ability to develop complex and high
16. quality programs and operating systems.
I Although this ability is somewhat
uncommon, it is not unreasonable to expect
that other companies, such as Apple, are able
to develop similar products of comparable
O Software development is Microsoft’s main
business process contributing to revenues.
V The dominance of Microsoft’s Windows
operating system and other programs such as
Office has given the company a high degree
of brand recognition among consumers.
R Microsoft’s Windows operating system is
the most common operating system used in
the world, with a reported market share of
88.42% on March 2, 2009.
I Competitors such as Apple have been
regularly eating away at this lead in market
share in recent years (PC Magazine, 2009).
This demonstrates that Microsoft’s ability to
develop a strong brand reputation can be
imitated over time.
O Microsoft has positioned themselves as the
absolute leader in the development of
Apple (Colin Swanson)
Apple Inc. is a major competitor of Research in Motion (RIM). The product that Apple markets
against the Blackberry is the iPhone. To compete against the blackberry, Apple requires their products
to be innovative, creative and unique. Apple’s main vision for its product is “man is the creator of
change in this world. As such he should be above systems and structures, and not subordinate to them.”
(Than, 4) They believe that they shouldn’t follow the trends of other products and differentiate to get
create their own market niche. As the blackberry dominates the sales in business world, Apple has
move away from RIM’s customers and focus their iPhone as a personal phone.
Similarly with other American corporations, Apple outsourced most of their value chain abroad
to foreign countries. Most of the assembly of the iPhone takes place in Taiwan with a company called
Foxconn (Who is the Real Manufacturer, 1). The major components of the iPhone are created by other
foreign companies before then are shipped to Foxconn to be assembled. For example in Taiwan: The
chip manufacture is produced by Taiwan Semiconductor Manufacturing Co (TSMC), display driver
chip is produced by National Semi, camera lens are produced by Largan Precision, battery charger is
produced by Delta Electronics and passive components are produced by Cyntec. In the United States,
the CMOS chip is produced by Micron, NOR Flash IC is produced by Intel, WiFi chip is produced by
Marvell and the touch screen is produced by Broadcom (Who is the Real Manufacturer, 2). They also
outsourced their information systems and transportation to other foreign and domestic companies
17. (Apple 10K, 37). They outsourced these parts of the values chain because they are more cost-effective
to have a foreign company manufacture and transfer the product, while Apple can specialize and focus
on their market niches and core competencies.
Apple also sells applications (a tangible resource) on their iPhone. With their research and
marketing team, they try to create unique applications that they believe their customers will use and
spend their money on (Apple 10K, 7). They will make applications that are free and primitive to their
customers, that don’t want to spend the extra money for these applications. With the customers that are
willing to spend their money on applications, they will add more useful and sophisticated applications
for variety amounts of customers. For example they will have applications for sports, news, finance,
business, fun applications like games, etc. Apple also has their iPhone compatible with their
competitor’s applications like Google and Yahoo and Microsoft (e.g. Google Maps, Yahoo Mail,
Seadragon). As well as other 3rd Party developers create applications for their iPhone. Apple does
create some of their own applications but since Apple wants to diversified their customers and meet
their demands, they will have applications from 3rd party developers including their competitors.
Since they outsourced most of their tangible resources, Apple is more focused on non-tangible
resources. Once the tangible resources of the iPhone are assembled in Taiwan, they are shipped to
Apple, where Apple must established Inventory Management System to make sure that they don’t have
an excess or a shortage of iPhones. Then they will then distribute the iPhone to other resellers, retailers,
wholesalers. Most of their iPhone are distributed to their own store called the Apple Store. This is a key
core competency key non-tangible resource for the company. It’s established a centralized store for just
Apple products and established a competitive advantage over their competitors that doesn’t have a
centralized store. So when they are selling the iPhone, they can provide quality customer service and a
personal touch for their customers.
Apple also has set up a Supplier Diversity Program which established suppliers that have the
fundamentals of being social and environmental responsible. For example they categorized their
suppliers as Minority-Owned, Women-Owned, Veteran-Owned, and Service-Disabled Veteran-Owned
Small Businesses, as well as businesses located in Historically Underutilized Business regions
(HUBZone) and Small Disadvantaged Businesses (SDB) (Apple: Procurement, 1) Apple also has a
contract with AT&T to provide phone services with their phone in the United States. With the
explosion of globalization, their iPhone is sold in over 70 countries and have other foreign companies
to provide the phone carrier (Apple 10K, 25).
Apple also has a Sale Consulting Program which is a non-tangible resource. They invest heavily
in marketing and research by hiring on consultants to bring new innovated ideas to Apple products.
They really focused on the idea of being creative and thinking out side of the box. Since Steve Jobs is
having health issues, the companies is searching for a new CEO that will need to bring the same
creative ideas that Steve Job has been able to established for his company . The consulting team has
been talking about introducing the iPhone into the business world to compete against the blackberry
customers to enter into RIM’s market niche. This could be a new strategy by Apple with Steve Jobs out
as CEO. However, as of right now, their hiring process is mostly consisting of hiring and rehiring
marketers, consultants, and executive operatives to bring new ideas and innovations to Apple. Since
they outsource all the manufacturing to other companies, this saves them money to invest into research
and development to promote this creativity. In 2008 research and development increased 42%, which
tells their customers, that Apple is putting a lot of money and effort to making their iPhone and other
Apple products the most creative, innovative and updated products on the market (Apple 10k, 66). This
research and development has created a competitive advantage of having the fastest wireless
connectivity in the smartphone industry. Currently their research and developing team is trying to
figure out how to make a longer lasting and more environmental friendly battery (Phan, 17).
Apple has also established brand and product quality from their previous successful products
like the iPod, Macbooks and Mac Desktops. This capability has helped with the success the iPhone
18. sales and most recently has had the highest customer satisfaction rating of all smartphone (Phan, 18).
With this product quality, they have established long time customers who are the main customers of the
iPhone. During the 90s many of these users left Apple products when Jobs was fired. When Steve Jobs
was rehired in the late 1990s (Young, 42), he helped rebuild old time Apple users and reestablished
their brand loyalty.
Apple has also established patents, trademarks and copyrights for the iPhone (and other Apple
products) (Apple 10k, 11) to help protect their ownership. Since they rely heavily on innovation skill,
technical competence and marketing abilities (Apple 10k, 12), they need to protect their intellectual
property. This gives their consultants, executive and marketers the incentive to strive for more
innovations and advancements of their products.
The last part of their value chain is: what happens to the old smartphone when a customer buys
a new smartphone? Since the iPhone is a recent product, this ending part of a value chain hasn’t been a
large concern for Apple. However with newer iPhones being established, Apple will take old iPhones
from their customers and utilized a special recycling program. This program will help keep their
company environmentally friendly and help customers get rid of their old iPhones. Since customers are
being more environmentally conscious, Apple wants to have the competitive advantage is being the
more sustainable and environmental friendly company in the market. This program is set up by their
Environment Management Team who strives for new innovations of making their product last longer,
more sustainable and more environmentally friendly. This team also devotes most of their time on
keeping track of their emissions and making their product life cycles as energy efficient as possible
(iPhone Environment Report, 1).
Even though their company outsourced all the logistics and manufacturing of the iPhone, Apple
does specialized in creativity, marketing, innovations and having their own Apple store to create their
own market niches and core competencies. These core competencies helped the company compete with
Research and Motion and have given Americans another alternative to the Blackberry with the iPhone.
Company Value Chain
Infrastructure Financial Accounting Legal Matter Management
V Creativity has been the company’s core
competency since Steve Jobs founded the
19. company. Since Jobs has been in control of
the company, his strive for creativity and
new innovations has create the Macintosh,
iPod, iPhone, iTunes, Macbook, etc
R Apple has the first mover advantage: every
time they create a new market niche, other
companies follow in their footsteps
I Since Apple specializes in creativity, they
used a lot of patents, trademarks to protect
their intellectual property
O Creativity can be substitutable with mass
production and focusing on quantity rather
then quality. However it is not an
improvement since Apple continues to be a
major leader in all the markets of their
V The Apple Store has help create brand
reputation with their customer service and
helped with their increased revenues sales
since they introduce the Apple store
R The only company within the industry that
has its own store
I Competitors are uncertain if they make their
own store will earn them more profits, so
their competitors will avoid this strategy of
making their own store
O Even with the emergence of buying products
online, creating a substitute that could be a
improvement of the Apple store, would only
stifle progress of a company.
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Financial Accounting Legal Matter Management
Benefits, compensation, rewards
Code of Ethics
Development & Training
Research and Development
Communication processor, display module, MCP, camera module, battery, GPS, WLAN, 10-Layer,
MicroSD Card, Power Management IC, Carrying Case, USB Charger, Enclose Main Top Cover,
Keypad Assembly, BlueCore4Rom (Cellular News, 2008).
Patent, copyright, contractual agreement
1.Research & Development
Research and Development: ten NRC around the world working closely with Universities around their
25. Fostering innovation
Finances Accounting Legal Matters Management
Advertising, Business Focus, Marketing arm
Production-10 plants around the world
They currently outsource: HP- IT infrastructure, IBM-help desk operations and desktop IT
environment, and HCL-Global deliveries.
Development & Training
Code of Ethics
Benefits, compensation, rewards
Financial Accounting Legal Matter Management
Research & Developing New Implementing New
Development Technology Technology
Billing Customers Credit Evaluations Collections
Marketing and Advertising
Development & Training
Code of Ethics
Benefits, compensation, rewards
Research and Development, Software Development
Programmers, researchers, engineers, product packaging, Blank Compact Disk and Digital Video Disk
Customer service support
Shipping to distributors
Research and Development, Programming, manufacturing
Development & Training
Code of Ethics
Benefits, Equity rewards
Research and Development: Applications, Apple Store
Protection of Intellectual Property
27. Focus on Marketing, R&D, Creativity, Being Environmentally Friendly, Supplier Diversity Program
Customer Service Support/ Apple Store
Sales Consulting Program
Research and Development
Inventory Management Warehousing