course material

1. (Mt) – British Columbia Institute of Technology Blackberry Mobile Phone
Strategy Case
BLACKBERRY’S MOBILE PHONE STRATEGY Waterloo, Ontario. When BlackBerry
announced that CEO Thorsten Heins would be replaced by John Chen, the company’s stock
fell 16 percent in one day. This is despite the announcement at the same time that Fairfax
Financial (which owns 10 percent of BlackBerry) would invest $1 billion in the company.
The strategy group at BlackBerry have to finish their assessment of what the company
strategy will be for 2014, 2015, and beyond. They will have to come up with several
strategic alternatives for the company to choose from in order to save the company and
turn it around in an increasingly competitive market. Certainly BlackBerry has had some
tough moments in the past year. The growth of the 20- to 35-year-old demographic is
showing continual signs that they are going to stay on the mobile communications
bandwagon (including social networking, web searching, and mobile applications).
However, many analysts say that BlackBerry made a mistake by trying to replicate and
mimic what their rivals were doing, and what they really needed to do was look at the core
customer base—people in government and business that want a secure transmission for
their communications. These corporate customers and “prosumers” seem to be the correct
target for BlackBerry to focus on. The world seems to have embraced the new cultural
aspect of information and communication all the time and everywhere. Technology is racing
to keep up, with all sorts of open source, proprietary, and market available software and
hardware becoming available all over the world. The illegal copying of technology in some
parts of the world has been more sharply controlled by governments, and the political
climate seems to be more open in China and India, both of which have great potential as
future growth markets. BlackBerry has not been doing well. Despite a robust patent
portfolio, their loyal cadre of CrackBerry users, and a cash reserve of $2.3 billion they have
been losing unsustainable amounts of money. In late 2013, BlackBerry had its steepest
round of continuing job cuts yet—laying off 4,500 employees (40 percent of its work force).
Their newest smart phones, the Q10 and Z10 were not a success, and BlackBerry was forced
to take a $1 billion write down on unsold inventory of the Z10 (which critics slammed
because it had a touchscreen-only as the first device on the BlackBerry 10 operating system,
rather than the Q10, which has a QWERTY keyboard—a main selling point for the
BlackBerry faithful). The strategy team has done a quick assessment of the strengths and
weaknesses of the firm, but they know that the opportunities and threats are a much more

2. important aspect to concentrate on. Additionally, they are going to be presenting a VRIN
based on BlackBerry’s Valuable resources, the Rareness of their capabilities, the Imperfect
Imitations available for their service and their products, as well as trying to determine what
BlackBerry’s Non-substitutable organization capabilities and resources will have to be in
order to exploit any kind of a turnaround strategy. What can they put forward that will
continue to be distinctive? What can they suggest as a core capability? The team is certain
that they will use the BCG matrix, but they don’t know if it is software they are selling or
advertising, security, or just actual devices. The fast-changing world of cellular phones
includes new phones and applications from Apple with their constantly upgraded iPhones;
Google with their Android phones; and Microsoft, with their Windows Phones. All of these
competitors have leapt into the fray with BlackBerry. And this is on top of the already well
entrenched Nokia and Motorola, who also have large shares of the mobile and smart device
market. The rivalry between firms is very high and new entrants seem to be coming into the
market every few months on a worldwide basis. The customer is a bit ambiguous as well. Is
the customer the endusing public, or is it the Internet service providers (ISPs) or the
network cell phone providers such as Rogers, Telus, and Bell Mobility? The suppliers of the
actual phones do not seem to have much bargaining power as most of the large firms have
their phones manufactured off-shore, primarily in China. It is not hard to think of what
would be substituted for the BlackBerry Q10 and Z10, but just how fickle is the consumer,
and how much bargaining power does the buyer actually have in the way of switching
costs? It is not certain if Chen’s strategy team should put forward a cost leadership strategic
alternative or if they should concentrate on some kind of differentiation strategy. The new
areas of revenue might just be in advertising. Certainly Google has a strong lead in all
Internet advertising, and it is anyone’s guess how aggressively they might pursue the
advertising market. Apple now has several years of experience with their iAds and has
ongoing contracts with many leading global brands (including L’Oreal, Renault, Louis
Vuitton, and others in Europe). BlackBerry’s own advertising service was launched several
years ago, and Microsoft has also landed several large customers with their advertising
platform. Is this the area of strategic growth? Is the advertising market a suitable focus to
base the future survival and possible growth of the company on, or is it merely another
service to offer in the mobile market? However, to paraphrase Twain: the reports of the
company’s death have been greatly exaggerated. Things are not impossible, even though
most students might not remember: Apple and IBM were turnaround stories once as well.
And John Chen has experience; when Chen took over Sybase, his former company, Sybase’s
stock had fallen below $5 a share, having lost 90 percent of its value over the previous four
years (BlackBerry’s stock has also lost about 90 percent of its value from its 2009 high).
SAP, the German software giant, eventually bought Sybase for $5.8 billion, or $65 a share in
2010. The strategy team will put together their ideas using (the SWOT Analysis found above
and attached to the News Notice), Exhibit 5.5 (the BCG matrix), and Exhibit 5.7 (Porter’s
industry forces analysis) and try to utilize Exhibit 5.9 (the direct competition framework).
However, they still are not certain if they are going to be swimming in a red ocean or a blue
ocean. At any rate, they know that they have to have at least three different strategic
approaches for Chen and his senior executives to review at their upcoming retreat, and they

3. know that all of the strategies need to be presented with their various advantages and
disadvantages. Sources: J. Pepitone, “BlackBerry’s hometown vows to survive,” CNNMoney,
24 October 2013, available at:
http://money.cnn.com/2013/10/24/smallbusiness/blackberrywaterloo/index.html; J.
Pepitone, “Where BlackBerry’s ousted CEO went wrong,” CNNMoney, 5 November 2013,
available at: http://money.cnn.com/2013/11/05/technology/mobile/blackberry-
ceo/index.html; K. Kelleher, “Corporate daredevil John Chen might just turn BlackBerry
around,” Fortune, 11 November 13, available at:
http://tech.fortune.cnn.com/2013/11/11/corporate-daredeviljohn-chen-blackberry/; R.
Beales, “Commuting, split roles don’t bode well for new BlackBerry boss,” The Globe and
Mail, 11 November 2013, available at: http://www.theglobeandmail.com/globe-
investor/commuting-split-roles-dont-bodewell-for-new-blackberry-
boss/article15377573/; Reuters, “BlackBerry Ltd needs to ditch its smartphone business in
order to bounce back, analysts say,” Financial Post, 5 November 13, available at:
http://business.financialpost.com/2013/11/05/blackberry-smartphonesturnaround/;
Apple, “Apple to debut iAds on July 1: Over $60 million in 2010 commitments from leading
global brands,” press release, 7 June 2010, available at:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDJSycdXnSGc ; Google,
“Google offers new model for consumers to buy a mobile phone,” press release, 5 January
2010, available at: http://investor.google.com/releases/2010/0105.html; Google, “Google
announces third quarter 2010 financial results,” press release, 14 October 2010, available
at: http://investor.google.com/earnings/2010/Q3_google_earnings.html; Microsoft,
“Windows® Phone 7 privacy statement,” September 2013, available at:
http://www.windowsphone.com/en-us/legal/wp7/windows-phone-privacystatement;
www.microsoft.com/windowsphone; WMPoweruser, “Windows Phone 7 an ‘advertising
machine’ launches in October,” June 24 2010, available at:
http://wmpoweruser.com/windows-phone-7-an-advertising-machine/ BlackBerry’s
Strategy In this case you read about the mobile phone maker BlackBerry. Their device,
using the text craze, and the security features of the phone, was very popular among
working professionals. It was also very popular with non-professionals as a personal mobile
device. The device had many competitors that were mentioned in the case. Creating and
implementing an effective strategy involves using the analysis tools present in chapter 6.
This holds true for any business, whether they are in the start-up phase or the maturity
phase, or in this case, the survival and turnaround phase. It is even more important for
businesses that must seek to continually innovate to remain competitive in an ever-
changing technical world. It is not certain if Chen’s strategy team should put forward a cost
leadership strategic alternative or if they should concentrate on some kind of differentiation
strategy. Utilizing the Case Study Analysis Format as an organizing tool, perform a SWOT
analysis and consider and discuss Porter’s Five Industry Forces, (Exhibit 5.7 page 100 in
text) as possibly the next step in the strategic development process. What strategy does
your team think is most beneficial at this time in BlackBerry’s strategic planning?