A Strategic Audit of Research In Motion with Strategy Recommendations

A Strategic Audit of Research In Motion with Strategy Recommendations

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A Strategic Audit of Research In Motion with Strategy Recommendations

I. Current Situation

Current Performance

Research In Motion completed another successful year with significant growth in finances and product development. In 2008, the company was highlighted with revenue growing 98%. They earned $6.01 billion in 2008 compared to $3.04 billion in 2007. The customer base for RIM became much stronger as the blackberry subscriber account base reached over 14 million people. Several new phones were introduced and RIM shipped the 25 millionth blackberry smart phone in 2008. The blackberry brand grew more powerful and saw over half of the subscriber accounts in the forth quarter come from non-enterprise customers. With the addition of over 80 new carrier partners around the world, they launched several software applications and solutions for the blackberry. In particular, they launched the Blackberry Professional Software for small and mid-sized business markets and Blackberry Unite for the home and small office/home office. In addition to the several product developments they also become the first mobile platform to receive Common Criteria Evaluation Assurance Level 2+ security certification. (RIM Annual Information Form)

Strategic Posture

Mission and Vision
Research In Motion does not have a mission and vision statement that is publicly available. According to their annual report; “RIM is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market.” Also in the annual report they include; “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, text messaging, Internet and intranet-based applications, RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity to data.” (www.rim.net)


• Extend Technology Leadership: maintaining its leadership by concentrating on the development of two-way wireless technologies and enabling applications, protecting its intellectual property and encouraging the adoption of its platform by wireless network providers and customers, and licensing the Blackberry to key handset and service vendors.

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• Broaden Strategic Alliances and Relationships: continue to strengthen and develop its alliances and relationships to enhance its competitive position. The alliances they are focused on are; enterprise and other software applications companies, global telecommunications carriers, OEM handset and wireless communication device manufacturers, intranet applications and portal companies, internet social networking providers, microchip manufacturers and global syems integrators.
• Promote and Enhance Development of Third Party Software: continue to enhance software development tools, provide technical support and accommodate external software developers to promote the development of software applications.
• Expand the Global Reach of the Blackberry Platform: continue to advance relationships with key carriers, distributors and customers and expand the Blackberry market and provide customers with access to their corporate or personal data anywhere in the world.
• Extend Blackberry’s Reach into the Prosumer and Consumer Market: expand into the prosumer and consumer market including partnerships with companies like google and yahoo. Also, expanding distribution into retail, indirect and value added reseller channels and launching handsets with consumer friendly features like the peal and curve.
• Maintain Market Leadership and Expand Customer Base: maintain its position as a market leader by focusing on sales and marketing on the continued use of strategic alliances and relationships to promote the sale of its product.
• Continue to Invest in High Qualified Personnel: continue its recruiting strategies to attract personnel that will support its product development and growth because it has been a key factor in the success of RIM.
• Pursue Licensing and Strategic Relationships with Industry Leaders: continuing to pursue arrangements with partners to allow third party handsets to access the blackberry architecture in order to expand the market and offer greater choice to users.
(RIM Annual Information Form)

Research In Motion is committed to conducting business operations in accordance with the laws, rules and regulations, and industry standards to a full and accurate disclosure. The Code of Ethics sets forth detailed policies that the employees must follow on a day to day basis. The expectations of the directors, officers and employees is engaging and promoting honest and ethical conduct and following the policies and procedures that represent the companies reputation. Included in the Policies:
• Conflicts of Interest: avoiding any conflict of interest that may arises when taking action or have interests that conflict in any way with the interests of RIM. These conflicts may make it difficult to perform work objectively and efficiently.
• Confidential Information: Employees are required to maintain confidentiality of all confidential information that is received
• Disclosures: commitment to making full, fair, accurate, timely and understandable disclosure in compliance with all laws and regulations in all reports and documents that are filed with the Securities and Exchange Commission and Canadian securities regulators.

Protection and Proper Use of RIM Assets: Protecting the companies assets.

Accuracy of Accounting Records: all corporate transactions and financial statements do not contain any false or intentionally misleading entries.

• Code of Ethics
II. Corporate Governance
A. Board of Directors
The company currently has eight board of directors. The directors are authorized to increase the size of the board of directors to a maximum of fifteen people without the prior consent of the shareholders. The directors and executive officers of the Company owned or controlled, directly or indirectly over 72 million common shares of the Company representing approximately 13% of the issued and outstanding common shares of the Company as of March 1st, 2008.

• James L. Balsillie: Co-Chief Executive Officer RIM (since 1993)
• Michael Lazaridis: President and Co-Chief Executive Officer RIM (since 1984)
• James Estill: Chief Executive Officer, SYNNEX Canada Ltd (since 1997)
• John Richardson: FCA Chairman, Ontario Pension Board (since 2003)
• David Kerr: Managing Partner, Edper Financial Group (since 2007)
• Roger Martin: Dean, The Rotman School of Management (since 2007)
• Barbara Stymiest: FCA Chief Operating Officer, Royal Bank of Canada (since 2007)
• John Wetmore: Corporate Director (since 2007)
B. Top Management
• Brian Bidulka: Chief Accounting Officer, RIM
• Robin Bienfait: Chief Information Officer, RIM
• Larry Conlee: Chief Operating Officer, Product Development and Manufacturing, RIM
• Dennis Kavelman: Chief Operating Officer - Administration and Operations, RIM
• Don Morrison: Chief Operating Officer, BlackBerry , RIM
• David Yach: Chief Technology Officer, Software, RIM
• Karima Bawa: Vice President, Legal, RIM
(RIM Annual Information Form)
III. External Environment: Opportunities and Threats (SWOT)

Growing demand for smartphones

Over the next few years, the demand for smartphones among the mobile users is expected to grow rapidly. The smartphone market is then expected to expand due to the demand for PC functionalities to support the data services. The smart phones currently have 38% of the global mobile market share and the prediction by 2010 is that they will have 70% of the global market share. RIM currently provides smartphones like BlackBerry 8700 Series, BlackBerry 7130 Series and BlackBerry Pearl and they are all available from over 200 carriers. With the current position that RIM is in right now, they are well positioned to capitalize on the growing demand for smartphones.

RIM and Yahoo! alliance

RIM and Yahoo! have expanded their strategic global alliance to bring Yahoo! Users worldwide are able download the beta version of Yahoo! Go 2.0 on select handsets including; BlackBerry 8700 Series, BlackBerry 7130 Series and BlackBerry Pearl. The companies also plan to make Yahoo! Go 2.0 available for future BlackBerry handsets and develop even better integration between the two. The relationship of the two companies would benefit mobile users who want to access Yahoo!'s services while on their phone. Go for Mobile 2.0 is a new application that improves the mobile Internet and provides a exclusive product design with enhancements in personal content and the search engine. The companies will continue to work together to bring other Yahoo! services to BlackBerry handsets and continue to enhance the features. The benefit of adding new services will create a competitive advantage and attract more customers.

Expanding Asia Pacific mobile phone market

The Asia Pacific region includes China, India and Japan and is the largest mobile phone market in the world. They expect to sell 64.2 million smartphones in 2010 compared to 18 million sold in 2006. The Asia Pacific region received 40% of all Smartphones were due to increasing demand for mobile data in the region. The prediction is that there will be over 1.1 billion smartphone users in the Asia Pacific region by 2011, which represents over 50% of the total market. In 2007, the BlackBerry Pearl 8120, the BlackBerry Pearl 8120 and the BlackBerry Curve 8300 smartphone were all introduced in India. Also that year, Alcatel-Lucent and Research In Motion signed a strategic agreement for the distribution of BlackBerry smartphones in China. Increasing demand in the Asia Pacific region would strengthen the financial performance of the company.


Intense competition

Since the demand for wireless data communication is so large the industry is rapidly evolving and no technology has been completely adopted as the industry standard for wireless data communication. The companies that RIM is currently competing with are; Casio, Danger, LM Ericsson, Fujitsu, HandEra, Hewlett-Packard Company, Hitachi America, Intermec Technologies Corporation, Itronix, Kyocera Corp, Microsoft Corporation, Mitsubishi Corporation, Motorola, NEC, Nokia, Novatel Wireless, NTT DoCoMo, Option, Palm, Sanyo Electronic, Samsung Electronics, Sendo, Sharp Corporation, Sierra Wireless, Sony Corporation, and Sony Ericsson. The effect that this intense competition could have on RIM is an increase of pricing pressure.

International business risks

Since RIM relied on a lot of revenue outside of North America, the threat of international business is present. The sales outside North America represented about 34.8% of revenues in 2007 in comparison to 26.7% of revenues in 2006. The company plans to further to pursue international market growth opportunities as the company has committed a significant amount of resources to its international operations and sales and marketing activities. The company has offices in Canada, the US, the UK, Japan, Hong Kong, France, Italy, Germany, Australia, Singapore, Spain, and China. As this continues the company would be in danger of a number of risks associated with international business activities that would potentially increase liability, costs, and lengthen sales cycles. Since the currency rates are constantly changing there are many foreign exchange risks from transactions in all countries. If the Canadian Dollar were to increase in value in relation the US Dollar, it would increase the company’s Canadian dollar expenses when translated to the US dollars for financial reporting purposes.

Economic slowdown in the US

The United States market is very important to RIM. According to IMF, the real GDP growth rate for the US would decline from 2.9% in 2006 to 1.9% in 2007. With the recent problems with the financial markets, weak housing market and consumer spending, the IMF has recently lowered its prediction for the US growth in 2008 by 0.9% to 1.9%. Economic issues in the United States will eventually reduce consumer spending and affect the revenues of the company.
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