Table of Contents
- Major Trends in the Mobile Phone Industry
- Price for an Essay
- Growth of Machine-to-Machine Communication
- Cars and Smartphones
- Connecting the World
- Mobile Money Transfer
- Video Experience
- Blackberry’s Core Competencies
- Secure, Encrypted Network
- Established Brand
- BlackBerry Messenger (BBM)
- Narrow Customer Segment
- Level of Competitive Strength
- Manufacturing Deal with Foxconn
- Strategic Assets
- Competitive Executive Profile
- Overall Appraisal of Blackberry’s Financial Performance Over A 3-Year Period
- Related Free Business Essays
BlackBerry Limited, which was previously known as Research In Motion Limited, is a Canada-based company that was founded in 1984 by Mike Lazaridis and Douglas Fregin. This company is a global leader in mobile communications as it has managed to revolutionize the mobile industry by the introduction of Blackberry mobile phones in 1999 (“Blackberry Annual Report”, 2014). However, in the recent years, the company has been on the verge of being whittled away by other significant competitors on the market who emerge quite quickly. The Blackberry market has been reducing at an alarming rate. Its products are overlooked by consumers, and its returns are mainly falling. With Blackberry being a pioneer of smartphones in the mobile industry, it comes as a surprise to many people that the company struggles to remain relevant on the market, yet it is supposed to be spearheading the industry. For very long, the company has been the leader in the industry of mobile phones but it has lost its place on the market after the introduction of smartphones into the current modern and quickly changing market.
Currently, the company has tried in many ways to gain relevance on the new market of smartphones that has been significantly dominated by new businesses. It tries many initiatives, internal reorganizations, and acquisitions to regain its grasp of a bigger share of the market (“Blackberry Annual Report”, 2014). This study is meant to run an analysis of Blackberry from a perspective of strategic management to understand how it can regain its grasp of the market by beating the competition from other mobile phone giants like Apple, Google, Samsung, and Microsoft, the companies that have dominated the modern market over the recent years (Drejer, 2002). The study will start by analyzing the current trends in the mobile industry and Blackberry’s position in this, Blackberry’s core competencies, the level of competitive strength that the company possesses, and an overall appraisal of the company’s financial performance over a 3-year period. Finally, a conclusion will follow plus the recommendations in terms of blue ocean strategies that the CEO can incorporate to revive the company.
Major Trends in the Mobile Phone Industry
The mobile phone industry is among the most competitive industries on the market with innovations and creations popping all the time. Every moment that passes, a new technology is discovered, and smartphones with new abilities are made with new applications leveraging the new features that come with them (Yoo, Lee, and Rowley, 2008). Due to this, new trends emerge at a very high rate, which keeps the mobile phone companies on their toes in coming up with innovations and creations that will appeal to the consumers to buy more of their products. Competition is very stiff, and the company that does not keep up with the pace loses its market share. The following are some of the major trends, emerging in the growing mobile phone industry (Yoo, Lee, and Rowley, 2008).
Growth of Machine-to-Machine Communication
Machine-to-machine communication refers to the wireless communication of objects by use of sensors and other devices to relate information to each other. In the mobile phone industry, there are many new partnerships that are currently developing, and different companies producing various products team up to link up their services and products to provide more satisfaction to the consumer (Drejer, 2002). For example, weather forecasting firms team up with mobile phone companies by linking up their machines to offer the user the luxury of accessing the updated weather changes of different cities on their handsets. Through these innovations, people and things are be able to interact in what is called the Internet of Things (IoT). In the near future, more and more machines will be integrated with mobile phones to offer the consumer a completely new world of experience.
Cars and Smartphones
This is a very new trend in the industry where the car is transformed into a mobile smartphone. Automakers team up with smartphone companies to incorporate mobile apps and the car into one thing (Schönhoff, 2014). Internet access in a car like the in-car 4G and Wi-Fi built in cars emerges extensively and quickly, making the car a moving smartphone. This connectivity between the car and the smartphone improves on safety, entertainment and geo-local advertising, allowing the consumer to enjoy more benefits (Yoo, Lee, and Rowley, 2008). The potential brought about by this integration to cars is enormous, and a greater number of mobile companies integrate this trend.
Connecting the World
The primary focus for all mobile phone companies is to connect everyone around the world. Through this, an emerging trend of manufacturing cheaper but quality handsets as well as reduction of data costs through the creation of new apps is ongoing. In addition, many of the mobile companies rethink their hardware and software designs that will attract the consumers.
Mobile Money Transfer
Mobile banking takes an enormous toll on consumers and helps end the old way of queuing in banks that leads to wasting a lot of time. Mobile and software manufacturers come up with new applications that allow customers connecting with financial institutions such as banks, and consumers can make transactions like paying electricity and water bills without making a trip to the bank (Drejer, 2002). This has created a tremendous impact on the developing markets by broadening people’s access to financial services.
Due to social interaction in the current age, the old way of communicating via voice calls and sending text messages slowly ends. It is being replaced a new trend that is more visual, easier, faster and fun. Apps such as Whatsapp, Instagram, and Skype rapidly change the communications world, and more of them are still being created.
This is a new trend that emerges in this industry where manufacturers of smartphones try to make the smartphone screen disappear. They make smartphones more convenient to the users and to save them the process of having to pull them out, unlock them, and open a relevant app. Accessories such as smartwatches, wristbands, and glasses are integrated with the smartphones to enable a more discreet experience and incorporate the technology into the daily routine of individuals (Yoo, Lee, and Rowley, 2008). Mobile phones will extend their capabilities to fit perfectly the human being and become a vital part of the human being.
Mobile companies come up with smartphones with fast processors, bigger and better screens, and increased storage capacity. This enables the consumer to watch long videos and movies at the touch of a button. Many emerging trends come up in the mobile phone industry, and Blackberry is on the forefront of manufacturing smartphones that flow with the trends on the market and introduce new trends in order to attract more customers (Schönhoff, 2014). With the launch of the new Blackberry Passport, which comes with Blackberry 10 and Blackberry Assistant, the company has joined other competing manufacturers by bashing the new releases of its greatest competitor Apple Inc. of iPhone 6 and iPhone 6 Plus. This new version has put the company back into the market where it tries to regain its original market share and more.
Blackberry’s Core Competencies
Although the company’s market share has fallen over the recent years, the company still holds some key skills that are not possessed by numerous other companies. These competencies are what can be attributed to company’s survival on the market to date. Without these basic skills, it would have gone bankrupt and out of business a very long time ago. To be able to recapture its huge market share, it would have to strengthen its core competencies and add to the list of them (Dreger, 2002). The following are the key skills of the company.
Secure, Encrypted Network
When it comes to communication, Blackberry has always been known by consumers to provide reliable and productive communication. No other mobile company provides an encrypted network to its customers like Blackberry, and this has made it an excellent choice for consumers compared to its competitors. The corporate world requires secure communications to pass sensitive and classified information among the members (Schönhoff, 2014). This makes Blackberry the best choice as it provides an encrypted network. Due to this fundamental competence, the company can maintain the consumers of its products and services.
Having been established and introduced in 1984 and 1999 respectively, Blackberry is the spearhead of the smartphone industry. It was the first company to produce smartphones with multimedia capabilities such as the camera. The smartphones became so popular with consumers, and by 2010 the company had a 43% of the market share in the United States alone (Yoo, Lee, and Rowley, 2008). Having been established long before other mobile businesses that currently compete with it, the company is well known by the consumers, and it has more knowledge of the market and the already established supply chains. It is a global company with a recognizable logo and a valuable established brand (“Blackberry Annual Report”, 2014). This gives it more advantage over its competitors and is, therefore, an essential competence.
BlackBerry Messenger (BBM)
By having this unique messaging platform that only comes with Blackberry smartphones, the company possesses a feature that is not available in other mobile companies’ phones, making it unique and attractive to consumers. This uniqueness and exclusiveness help it maintain its customer base as it is a core competence.
Narrow Customer Segment
Blackberry produces high-end products mostly for corporate clients; through this they can focus on the problem facing corporate world and they can integrate the solution in their smartphone, for example, the integration with corporate PBX that allows employees to have full access to corporate phone books anywhere they go.
The 4-criteria test checks if there is a distinctive competency to a company by looking at the brand image, innovation, financial position, demographic and geographical segmentation and knowledge base (Drejer, 2002). Looking at the essential skills mentioned above, one could draw a conclusion that there are only two distinctive core competencies, which are the secure, encrypted network and BlackBerry Messenger. These are the skills that are unique to BlackBerry alone making it stands out from its competitors.
Level of Competitive Strength
The smartphone market is among the most competitive markets in the world. At one point in time, Blackberry had the entire market share all to itself but such a time is long gone. On the present market, there exist too many competitors for BlackBerry. Due to this, the company has significantly dropped its sales over the years.
BlackBerry has competitors in the production of hardware, the likes of Samsung, LG, and Nokia and also in the manufacture of software. Apple Inc. is BlackBerry’s biggest competitor in the United States since it produces both hardware and software just like BlackBerry (Schönhoff, 2014). Many companies that are emerging in the smartphone industry only specialize on the manufacturing of equipment since this is the easy part. The difficult task is building the operating system that runs the smartphones. Most BlackBerry competitors construct the hardware but rely on other companies for the software; therefore, BlackBerry remains among the few businesses that build their operating system. The sector of developing the software is the one that has attracted the biggest businesses in the world (“Blackberry Annual Report”, 2014). Apple uses the iOS; Google uses the Android OS, and Microsoft uses Windows OS. These are the most major competitors to BlackBerry in the software building industry that has caused the reduction in its sales (Jones, 2010).
This company possesses two levels of competitive advantage that are the temporary sustainable advantage and the sustainable competitive advantage. Under the temporary sustainable advantage, there is the following:
Manufacturing Deal with Foxconn
At the beginning of April 2014, BlackBerry launched two Blackberry smartphones, namely the Q20 and the Z3 respectively whose developer was Foxconn. The new relationship between the two companies has added value to the Blackberry market. Having been retailed in Indonesia below $200, the Q20 offered a very attractive price to consumers (“Blackberry Annual Report”, 2014). By doing this, Blackberry has been able to lower its inventory risk, and, at the same time, offer new designs that it had missed out by not following the market trend. So far now, Blackberry enjoys a temporarily competitive advantage as long as its competitors do not make a similar deal (“Blackberry Annual Report”, 2014).
Blackberry has established a niche for itself by producing products and services that are aimed at meeting corporate and business needs. The current estimates show that it has a patent portfolio of 5 billion dollars and 200 million dollars. This creates a temporary competitive advantage that is difficult and expensive to imitate because of its unique nature (Schonhoff, 2014).
The other level of competitive advantage for this company is the sustainable competitive advantage. Under this there is:
Competitive Executive Profile
The acting CEO for Blackberry, John Chen, who was appointed in November 2013 as the chairman of the board, has brought changes in the company’s strategic and organizational goals. This gives Blackberry a sustainable competitive advantage over its competitors since it is impossible for the competitors to have the same leader who can bring the same changes.
Overall Appraisal of Blackberry’s Financial Performance Over A 3-Year Period
Focusing on the finances of Blackberry for the past three years, one can say that the company has been on the verge of extinction from the mobile industry by other more competitive companies (Schönhoff, 2014). Since 2012, it has been recording losses down until recently after a new CEO was chosen to run it, and that was when some changes emerged, promising in reviving the sleeping giant once again (Schonhoff, 2014). Before the introduction of new companies in the industry, Blackberry dominated the market, and with every quarter of a fiscal year, it recorded an increase in the market share and sales. This went on until when new competitors emerged on the market.
The onset of Blackberry’s fall started a few years after Apple introduced the iPhone to the world. Blackberry did not bother to change its strategies to fight the competition that was clearly evident. It continued to pursue its old policies since it still was highly valued and it controlled a huge market share. The share prices then were as high as $236 per share (“Blackberry Annual Report”, 2013). It continued to grow in revenues, and this was a confirmation that its products were the most popular ones, commanding very high prices and a strong customer loyalty. Being on the winning end, Blackberry did not think that there was any threat in terms of competition from smartphone technology.
Blackberry chose to focus on its already established market and left the then seen as an unproven market to companies like Apple, thinking that it would not pose any threat to its significant market share. It was this great mistake of failing to see the opportunity that was present that led to Blackberry’s fail (Schönhoff, 2014). On seeing the turn of events and how Apple started to take up its market share, Blackberry tried to respond to the new trend of smartphones by incorporating a number of new strategies to try and fight the rising competition. The company started its production of smartphones termed as ‘the storm’ to make a grip of the growth of the smartphone market. This was an unfortunate move by the company since it did not manage to secure a firm stand on the newly emerged market. Their new smartphone was not liked by consumers and it received mediocre reviews; they did not possess any core competencies in the smartphone technology (Schonhoff, 2014). They also could not depend on other big companies like Google’s Android since such companies also entered the new smartphone industry.
Due to this, the market share of Blackberry in the United States was taken up by Apple, and the company had to look for new markets outside the US. Blackberry targeted emerging markets, especially in Latin America and Asia where it managed to secure a 50% share of the market by reducing the prices of their mobile phones. As many competitors emerged on the market, other Asian companies appeared with quality smartphones at even lower prices, thus pushing Blackberry out of the market. This significantly reduced the market share of Blackberry by reducing its sales, and from then on, the company started recording only losses. The giant company became more irrelevant to consumers as many opted for the user-friendly smartphones produced by other firms (McNish and Silcoff, 2015). All this took place about three years after Apple launched the iPhone. Since 2012 up to recently, the company has been on the verge of extinction with dangerous financial statements. Recently in 2015, after the business acquired a new CEO John Chen, the company has changed its financial strategies; it now finds its way into the smartphone market, so people see a promising future for the company.
From the above analysis of the dynamic in which the mobile phone industry has been over the last decade due to the introduction of smartphones, Blackberry has to incorporate a blue ocean strategy in order to regain back its market share and dominate the industry once again. The authors of the book Blue Ocean Strategy, Renee Mauborgne and Chan Kim state that instead of trying to steal customers from rival firms, companies should develop new markets with no competition that they term as a blue ocean (Schönhoff, 2014). The red sea is the market that is full of competitors. The mistake made by many companies are focusing only on competition and forgetting to focus their attention on finding, developing, exploiting, and protecting blue oceans. When a corporation finds a blue ocean, it creates its demand other than fighting for it (Kim and Mauborgne, 2005).