Following your request to us to assess your company's current situation, this is a report from us on your situation and recommendations on strategies that the company should pursue to address its current problems.
Research In Motion Company is a company that produces the BlackBerry product line. It is a worldwide leader in the wireless revolution. It has revolutionized the mobile phone market with the introduction of the BlackBerry in 1999. The black Berry products include BlackBerry smart phone, BlackBerry play book tablet, and business software. These products are used worldwide.
The revenue for fiscal year 2007 was 50% more than that of the previous year. To crown this, there has also been a continuous increase in the sales revenue in the previous year’s though at a decreasing rate. Comparison between RIM and its competitors such as apple, Nokia, Motorola and Palm shows that overall RIM had performed the best. Its revenue growth in the second year; however, is less than that of its competitor Apple.
From the financial statements of the year 2007, the gross margin was 54.6%, which was a drop from the previous year. This was as a result of sales revenue from consumer oriented products such as pearl enterprise users, which had a lower average selling price as compared to devices targeting.
RIM also incurs the second highest sales and marketing selling and administration cost which is 17.7% of the revenue after Palm.
- Mission of RIM
The current mission statement of RIM is to create a digital community aimed at serving the needs of small business professionals. This is achieved by giving them the insight they need to maximize the benefits of Smart phones. (Ireland & Hitt 2008)
- Current situation of RIM
RIM is currently facing stiff competition from its competitors who include Nokia, Apple, and Motorola among others. These competitors are better established in the consumer market as compared to RIM which is better established in the enterprise market. The competitors are slowly penetrating into the enterprise market while RIM is experiencing difficulties getting into the consumer market. The consumer market is larger than the enterprise market; therefore, the need for RIM to try and increase its consumer market share.
- Environmental analysis
The company operates in an environment where there are other leading competitors such as Apple, Nokia and Motorola. These major competitors impose stiff competition on RIM especially in the consumer market where it has less than one percent market share.
1. Blackberry brand and reputation
RIM has gained reputation worldwide especially in the population aged between 18 to 40 years because of its BlackBerry product. RIM has also ensured that its products are of high quality through its research and development section. This is where it ensures innovation of high quality products. RIM has gained a reputation as the leading enterprise devise manufacturer and enterprise buyers trust its products.
2. Blackberry Enterprise Server (BES)
BES increases e-mail security, and it was designed to work with the best e-mail systems, which at the time were Microsoft exchange and lotus Domino. This was launched after the non-server version of the BlackBerry. It is developed to satisfy the ever increasing demand of the enterprise and government.
3. Innovative and strong foundation of technological assets.
RIM has innovative employees who own different patents and this makes its products leading brands in the market. This is based on its research and development section. RIM is viewed as the leading enterprise devise manufacturer in the world. (Ireland & Hitt 2008)
4. Dominance in the business Sector
BlackBerry has the largest enterprise market share when compared to its competitors. This brings in most of its revenue.
5. RIM has its own distinct wireless transmission network/equipment
1. Limited Product range
BlackBerry has limited product rage. Its products include BlackBerry smart phone, BlackBerry play book tablet, and business software. Most of the products also target enterprises and not individual consumers.
2. Market target is limited
RIMs major target, at the moment, is the enterprises market, and it has not invested enough on the consumer market. As per 2007 fiscal year RIM holds less than one percent of the consumer market.
1. Develop new target market and globalization of the target markets
RIM can develop a new target maret, for example they can target the younger generation in order to be able to increase its sales volume. There is also a lot of unexploited market in the developing countries especially those of Africa.
2. Develop new commodities in order to deepen their market penetration
RIM can develop new products e.g. laptops in order to deepen the market concentration. This will also increase its popularity in the market hence an increase in the market share.
1. RIM’s encrypted e-mail system may be prohibited in some countries.
Different countries have different laws and regulations regarding protection of information. Some laws may be unfavorable to RIM, and this may lead to fall in demand of the RIMs products.
2. Innovations by competitors
RIMs competitors such as Apple coming up with business-look cell phones can significantly lead to reduction in sales volume of Blackberry. Development by competitors of applications that are similar to those of RIM takes RIMs software benefits due to increased competition.
- Problem identification
a) Weak network with the consumers
There is still a large population of consumers that are not aware of the RIMs products. The financial statements show that, as a result of RIM trying to engage in the consumer market, there was a decline in profitability growth. This was as a result of introduction of pearl smart phone which had a lower average selling price as compared to devices targeting the enterprises. (Ireland & Hitt 2008)
b) Market target is limited
RIM has concentrated in the enterprise market more than the consumer market. This has given its competitors such as Nokia and Motorola an added advantage to increase their consumer market share which is larger. These competitors have; however, been able to penetrate into RIMs enterprise market.
c) Limited range of products
RIM has limited range of products when compared to its competitors. This is particularly due to concentration of RIM on the enterprise market. (Farrell & Hartline 2011)
- (a)Supporting Facts
i. From the financial statements of the year 2007 the gross margin was 54.6%, which was a drop from the previous year. This was as a result of sales revenue from consumer oriented products such as pearl which had a lower average selling price as compared to devices targeting enterprise users.
ii. From the financial statements the sales revenue is divided as sales from devices, services, software and others. Services refers to the three RIM components in its BlackBerry solution this means the range of products is limited. (Ireland & Hitt 2008)
The major assumption is that inflation and other economic factors were constant.
- Build up RIM’s Product image
This can be done by re-designing or improving the logo and slogans of the company and company’s website to be more attractive to consumers. Product image can also be increased by ensuring that the products are available in most of the regions in the world. The company can also build up its image by undertaking more advertisements and also developing consumer friendly products.
i. Logos and slogan helps product acknowledgement. A logo is the identity that will represent the company in the market. It should be related to the company’s product. Similarity is very important between the brand and logo. A company is recognized in the market by its logo. (Ireland & Hitt 2008).
ii. Attracts younger generation who are the most active when it comes to changes in technology to the website.
i. This may lead to confusion of the present customers. This is because; it may be time consuming for them to identify these changes.
ii. May lead to unrest to the product trustworthiness as consumers might not be sure whether it is the same product.
iii. Rise in administrative cost. This will come up as a result of increased cost as the company tries to create awareness of the changes. (Farrell & Hartline 2011)
- Target new market and diversify the existing one.
This is done by first identifying new target audience. New market can be identified through promotional campaigns and market surveys. RIM can access a new market by;
- Producing Blackberry that fits different groups depending on age, social status, gender among others.
Raise brand awareness through a variety of Colors and designs. The easiest way of raising brand awareness is through advertising. Some ways to make public the company’s products is through promotional mails and messages, blogs and articles. The method to be used will depend on the budget of the company. (Ireland & Hitt 2008).
- Develop Application stores support. Development of a variety of applications in one product will attract more customers.
Emphasis on social Media such as Face book and tweeter.
Social media is a very efficient mode of advertisement especially where the target is the young generation. (Farrell & Hartline 2011)
This will lead to increased brand awareness and increased target market. This will in turn lead to increased revenue.
Increasing customized product could be risky as it would lead to increase in cost of production. Increasing the range of RIM’s product lines
This may include products such as laptops. Developing new RIM laptop BlackBerry would lead to increase in product range hence higher revenue.
i. Create publicity for the product and RIM Company increase in the variety of products will lead to increased accessibility by more people, which will result to publicity of the product.
ii. Increases sales revenue of the company. This will be, as a result of, increase in the volume of sales due to a wide variety of products.
iii. Captures new market and increase brand awareness.
iv. The introduction stage of product lifecycle will be reduced. This will be because people are already aware of the company and its products.
i. Initial investment can be high. This is as a result of increased production cost associated with acquisition of new technology to be used in production.
ii. It takes a lot of time and resources to develop a completely new product a lot of time is used in market research and also in research and development of the product. A lot of resources are also used in carrying out these activities.
iii. Risky when launched where there is an established competitor. When there is a competitor who has already established his product, thus it may be very difficult for the new firm to penetrate into the market. (Farrell & Hartline 2011)
After careful analysis of the data collected, the best recommendation is Solution 3.
Increasing the range of RIM’s Product Lines.
This would cater for the other problems as it would increase the market target and also build up the company's brand image
Implementation of the solution
1. Announce the BlackBerry laptop in the market. This will create awareness and expectation in the market. This will make it easy to sell the product ones produced.
2. Do market testing through market surveys of various market segments. This will enable the company forecast on the viability of the product. (Farrell & Hartline 2011)
3. Use the information collected in the market survey to start the development process. This is done after ensuring the product is viable. This may take a long time, and it takes place in the research and development section of the company.
4. As publicity continues to build up carry out the second solution to gain new markets. That is;
i. Produce a product that fits different groups depending on age, social status, gender and many more.
ii. Raise brand awareness through a variety of Colors and designs
iii. Develop Application store Support
iv. Emphasis on social Media such as Facebook and tweeter
5. Start test marketing in selected regions where there is a limited supply of the product.
6. Use the feedback from the market and launch the product to the public. How to monitor implementation of the solution and evaluate its success or failure to resolve the problem.
1. Check the impact of the new product on the overall profitability of the firm
2. Calculate the profitability ratios of the company before and after implementation of the product and find out the changes on these ratios.
3. Do financial comparison of RIM and the competitors and get the effect of the new product.