Pest analysis for rim

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  • 1. PESTEL analysis of BlackBerry<br />RESEARCH IN MOTION LIMITED-BLACKBERRY<br /> Research in motion limited was founded in the year 1984 by Mr. Michael Lazaridis, the company's President and Co-Chief Executive Officer, and Mr. Douglas Fregin (RIM-2009). The company then grew in to one of the leading designer and manufacturer of wireless solutions, the company product portfolios include the blackberry wireless solution and other software and hardware solutions. The major markets of the company include North America, Europe and Asia Pacific (RIM-2008). RIM generates most of its revenues through the blackberry wireless device with various features which provides a user friendly interface. Although the company has been growing since its inception. In early 1990’s the company was focussed on developing wireless data technology but by far the significant year for the company was 1999 when it introduces the blackberry solutions and in following years it has launched many advanced models of blackberry solutions in partnership with various service providers which includes Yahoo, AOL, MTN, Qtel etc.(RIM-2008).The company has recorded a revenue of US$14.935 million in the financial year 2010 which is an increase of 35% compared to FY 2009 with USA alone accounting for 57% of the revenue. The devices accounted for 81% of the revenue followed by service (14.4%), software (1.7%) and other (2.8%). (RIM -2010). Although the company is doing very well financially, it is not immune the pressure of external forces and following section highlights some of the external forces impact on RIM.<br />PESTEL ANALYSIS<br /> The pestel analysis provides an insight in to the factors which will affect the industry which in turn will also affect the companies that operate within the industry (Johnson et al 2008).<br />Political<br />•The fairly friendly political climate in North America especially in USA has helped the smart phone industry especially RIM to flourish as the recent survey by Nielsen pointed out that the users of smart phones will overtake feature phone users by 2011(Nielsen wire 2010) . The actual challenge for RIM has been in countries like China, India and UAE where the countries have raised concerns over the security feature the blackberry provides to users as it becomes hard to monitor for the government authorities (BBC 2010). RIM has also been scrutinised in countries like Saudi Arabia, Indonesia, Kuwait, and Egypt for the above mentioned reason (Guardian 2010). Another major political concern is that some of the European countries like UK, Germany etc have imposed strict regulations with respect to hygiene and safety standards for manufacturers which may impact the operations of RIM as faces pressure from the usage of toxic contents, energy usage and recycling( Farrar.j 2009)<br />Economic<br />•The economic factors plays a key role in the smart phone industry as the demand is fairly elastic and it is mostly based on consumer income but the recent economic downturn has had an impact as people are not willing to spend on a product unless the price is right and it offers the promised values but the smart phone industry is expected to grow at fairly steady pace and the developing economies of India, China, Latin America provides a platform for RIM (economic times 2009). Since the sales of blackberry are made throughout the world the exchange rates will also have an impact on RIM as the fluctuation in exchange rates can suddenly make blackberry competitive - or prohibitively expensive. The exchange rate fluctuation can have a profound on blackberry especially in price sensitive markets like India and China. RIM has stock options in various countries and exchange rates directly affect the realized return on an investment portfolio with overseas holdings(RIM 2009)<br />Social<br />•Social factors such as education, lifestyle, income levels have great impact on the demand patterns and also the cultural aspects have an consequence on seasonal sales as well for example in a country like USA sales of blackberry and other electronic equipments seems to be fairly high during the period of November to December, the holiday season (Jaroslovsky.R 2010) and another huge socio cultural factor which have an impact on RIM is the ever increasing usage of blackberry by anti social elements which will have an impact on the brand image of the company and its product because the consumer markets in religiously sensitive countries may visualise the product as integral part of anti social elements operations and business markets may decline to use the product since strict regulations of the government following the usage of products by anti social elements will hamper the products performance.<br />Technological<br />•The technological factor has a huge impact on the industry as a whole and in particular RIM’s product, as the customer base of the product demands fairly new and robust features in the products. Technological advances over the past decade like 3G technology has had a he impact on RIM, also the ever increasing competition in the market is competing on the software offerings of the product. The blackberry smart phones as such are highly adaptable to technological changes as it can be used with various advanced services like HSPA/UMTS (high-speed packet access/ universal mobile telecommunications system), GSM/GPRS/EDGE (global system for mobile communications/general packet radio services/enhanced data rates for global evolution),CDMA/Ev-DO (code division multiple access/evolution-data optimized), and iDEN (integrated digital enhanced network) (RIM 2009)<br />Environment<br />•The environmental aspect also has a huge impact on the industry as the manufacturers must comply with various environmental standards and RIM over the years have ensured that the standards of manufacturing are fairly ecofriendly and any mishap could potentially tarnish the image of the company in the consumer market, thus environmental factors like product recycling, energy usage, wastage developed during manufacturing may also affect the company(BBC 2008)<br />Legal<br />•The major legal issues that are affecting the RIM are mentioned in the one of the previous section under political factors .The companies services are fairly secure and it becomes hard to monitor, so regulatory bodies of countries like UAE, India etc are considering to ban the services, this could have an huge impact in its operations (BBC 2010), also RIM is facing various legal battles with companies like visto, motorola etc have had implications on the company. RIM is facing one from Minerva Industries, which filed two complaints in 2007 and 2008 against RIM alleging that infringement of its patent. In December 2008, MSTG filed a patent infringement lawsuit against the company (BBC 2008). In March 2010, the PACid Group filed a lawsuit against RIM and 30 other defendants alleging infringement of patents (BBC 2010). The impending law suits will also incur in expensive settlements, all these legal issues will have a huge impact on the company’s performance.<br /> Thus these are the major macro factors which affect the industry and these in turn drive the micro factors which are explained in the following section.<br /> <br /> <br />REFERENCES<br />•Adobe (2010); press release;www.adobe.com( Accessed 19/09/2010) <br />•BBC (2008);News; www.bbc.co.uk ( Accessed 23/09/2010)<br />•BBC (2010);news -technology;www.bbc.co.uk ( Accessed 19/09/2010)<br />•Bertolucci.J (2010);the latest, greatest smart phones; Kiplinger’s Personal Finance; Vol. 64 Issue 9, p86-88 ( Accessed 19/09/2010)<br />•Bloomberg (2010):news;www.bloomberg.com ( Accessed 20/09/2010)<br />•Buyers guide (2010);Commercial Investment ; Jan/Feb2010, Vol. 29 ( Accessed 19/09/2010)<br />•Economic times (2009):news:www.ecnomic times.com ( Accessed 19/09/2010)<br />•Farrar.J (2009); From Blackberry to Greenberry: RIM Goes Green at CeBIT; Business source premier (Accessed 23/09/2010)<br />•Guardian (2010):news-technology-blackberry;www.guardian.co.uk ( Accessed 20/09/2010)<br />•Gerry J, Kevan S, Richard W( 2008);exploring corporate strategy 8th edition;prentice hall ( Accessed 19/09/2010)<br />•Hein,K (2009);Phones Top List of Most-Trusted Brands;Sales & Marketing Management; Vol. 161 Issue 6 ( Accessed 19/09/2010)<br />•Inter Brand (2010); global top 100 brand;www.interbrand.com ( Accessed 19/09/2010)<br />•Jroslovsky.R (2010);Bloomberg Businessweek; 8/16/2010, Issue 4192 ( Accessed 20/09/2010)<br />•Nielsen wire (2010);Smartphones to Overtake Feature Phones in U.S. by 2011:http://blog.nielsen.com ( Accessed 19/09/2010)<br />•Porter, M. (1985) Competitive advantage: creating and sustaining superior performance. New York: Free Press. ( Accessed 19/09/2010)<br />•Reed.B (2010);The BlackBerry will win;Network World; 1/18/2010, Vol. 27 Issue 2, p24-27 ( Accessed 19/09/2010)<br />•Research on the Smartphone Market (2009);Yano Research Institute;www.yanoresearch.com ( Accessed 19/09/2010)<br />•RIM (2008). RIM Annual report 2008. www.rim.com ( Accessed 19/09/2010)<br />•RIM (2009). RIM Annual report 2009. www.rim.com ( Accessed 19/09/2010)<br />•RIM (2010). Our company. www.rim.com ( Accessed 19/09/2010)<br />•RIM (2010). RIM Annual report 2010. www.rim.com ( Accessed 19/09/2010)<br />