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Blackberry Turnaround Strategy

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    BlackBerry Limited, formerly Research In Motion Limited, incorporated on March 7, 1984, is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services, it provides platforms and solutions for seamless access to information, including e-mail, voice, instant messaging, short message service (SMS), Internet and intranet-based applications and browsing.

    The Company’s technology also enables an array of third party developers and manufacturers to enhance their products and services through software development kits, wireless connectivity to data and third-party support programs. Its portfolio of products, services and embedded technologies are used by thousands of organizations and millions of consumers around the world and include the BlackBerry wireless solution, the RIM Wireless Handheld product line, the BlackBerry Playbook tablet, software development tools and other software and hardware.

    The Company’s primary revenue stream is generated by the BlackBerry wireless solution, consists of smart phones and tablets, service and software. BlackBerry service is provided through a combination of its global BlackBerry Infrastructure and the wireless networks of its carrier partners. BlackBerry Smartphone’s uses wireless, push-based technology that delivers data to mobile users’ business and consumer applications. BlackBerry Smartphone’s integrate messaging including instant messaging, email and SMS; voice calling; Web kit browser; multimedia capabilities; calendar, and other applications.

    During fiscal 2012, it introduced 10 new Smartphone’s and launched software updates to both its Smartphone and tablet platforms. BlackBerry Smartphone’s are available from hundreds of carriers and indirect channels, through a range of distribution partners, and are designed to operate on a variety of carrier networks, including HSPA/HSPA+/UMTS, GSM/GPRS/EDGE, CDMA/Ev-DO, and iDEN. During fiscal 2012, its BlackBerry Smartphone and tablet portfolio included BlackBerry Bold series, BlackBerry Torch series, BlackBerry Curve series and The BlackBerry PlayBook tablet.

    Its BlackBerry Bold series includes BlackBerry Bold 9900 and 9930 and BlackBerry Bold 9790. The Company’s BlackBerry Torch series include BlackBerry Torch 9810 and All-Touch BlackBerry Torch 9850 and 9860. The Company’s BlackBerry Curve series include BlackBerry Curve 9350/9360/9370 and All-Touch BlackBerry Curve 9380 Smartphone. The BlackBerry PlayBook tablet features the BlackBerry PlayBook OS 2. 0. The BlackBerry PlayBook offers a seven-inch high definition display, a dual core one gigahertz processor, dual high definition cameras, multitasking and a Web browsing.

    The company introduced its first BlackBerry device in 1999. For e-mail-obsessed Wall Streeters and other corporate users, it was a godsend. BlackBerry pioneered “push e-mail,” meaning that users simply received their messages when they were sent, instead of having to constantly check for new e-mails. BlackBerry’s QWERTY keyboard was like an epiphany: no more pecking at a numeric keypad to eke out messages. In the years that followed, the BlackBerry keyboard spawned a whole generation of dual-thumb e-mail warriors.

    As the BlackBerry exploded in popularity, especially among business customers, the company became Canada’s most valuable firm, leading some to dub Waterloo Canada’s Silicon Valley. But while BlackBerry was resting on its laurels atop the corporate mobile market, Apple and Google were laser-focused on the consumer market, which they correctly predicted would drive Smartphone adoption. In January 2012, BlackBerry announced that its co-CEOs Jim Balsillie and Mike Lazaridis would step down and be replaced by Thorsten Heins, a German-born executive who joined the company in 2007.

    Nearly two years later, Heins has not yet been able to execute a turnaround. SWOT Analysis of BlackBerry 1. Strength Strong relationship with more than 650 carriers around the globe More than 72 million loyal customer base Core Competency in security encryption feature QWERTY keyboard ease the typing experience It is a preferred enterprise phone with 14 million users. 2. Weakness Slow response rate to competitors Outdated OS 7 phone with poor interface and usability, still present in the market Lacks clear positioning Lack of apps when compared to Android and Windows Took too long to introduce OS 10

    High price of OS 10 phone 3. Opportunity Smart-phone market growing at a rate of 41. 7% annually Strong growth of mobile advertising market Better competence of OS 10 when compared to other leading mobile OS Overwhelming acceptance of BB 10 in India, Canada, UK and Indonesia 4. Threat Competition from market leader that has already achieved economies of scale like Android and Apple Challenges from Nokia which after being acquired by Microsoft can come up with strong differentiated products Rapid technological changes. Stiff competition may quickly burn retained cash in hand of blackberry Smart Phones Industry Analysis

    Three main factors will influence the Smartphone industry in 2013: relationships between platform leaders and hardware manufacturers, market demand and carrier support, and the decisions of a number of major players with regard to key transitions or major trends. Google will continue to step up its control over the Android ecosystem and its partners; even the majority of tier-one hardware brands are now wary of crossing Google. But many telecom carriers are unenthusiastic about a market divided solely between Android and iOS, and have already decided to support Windows Phone as a third platform.

    Nokia’s Smartphone sales have fallen far short of even its own forecasts in 2012, with sustained losses steadily eroding its once plentiful cash reserves. If the company fails to reverse this trend in 2013, there is a good chance that it will be broken up and sold off. If this were to happen, Microsoft could snap up Nokia’s already Windows Phone-oriented Smartphone division, giving it access to the Finnish firm’s global service and carrier relationships, as well as its sales channels – a useful tool for Microsoft as it prepares to launch its own Windows Phone handsets.

    If sales of new models featuring the BlackBerry 10 platform set for launch in early 2013 are less than ideal, RIM will also face the prospect of being sold, or perhaps transitioning away from hardware to become a software and service-focused firm. Such a move would potentially leave other players to fight over the business handset sector that RIM has long dominated. While the European debt crisis seems to be abating, many Western European nations are experiencing a resulting drop in government expenditure and consumer spending, issues that are likely to persist into 2013.

    Telecom carriers in these regions are tightening their belts and reducing subsidies, which will impact on Smartphone sales in general and high-end models in particular. However, Smartphone penetration rates will continue to rise rapidly in emerging markets such as China, Russia, India, Indonesia and South America; it is these markets that will contribute the bulk of shipment growth in 2013. It was projected that global Smartphone shipments will rise from 655 million in 2012 to 865 million in 2013, with a year-on-year growth rate lower than those in 2010 and 2011.

    But the proportion of overall handset shipments accounted for by Smartphone’s will rise to 43. 9%. India is the second largest mobile handset market in the world (after China), and is poised to become an even larger market. Revenues of the Indian mobile handset market grew by 15% to touch USD 6. 75 Billion in 2010-11 from USD 5. 88 Billion a year back. The mature Indian mobile consumers’ increasing preference for high-end handsets and the younger demographics’ desire to use mobile Web technologies could see the Smartphone markets revenues soar.

    Apple’s smartphone sales reached 32 million units in the second quarter of 2013, up 10. 2 percent from a year ago. 5. Worldwide mobile phone sales to end users totaled 455. 6 million units in the third quarter of 2013, an increase of 5. 7 percent from the same period last year, according to Gartner, Inc. Sales of smartphones accounted for 55 percent of overall mobile phones sales in the third quarter of 2013, and reached their highest share to date. 6. In the smartphone operating system (OS) market, Android surpassed 80 percent market share in the third quarter of 2013, which helped extend its leading position?

    However, the winner of this quarter is Microsoft which grew 123 percent.  Both the Smartphones as well as tablets fall under Dog quadrant of BCG matrix. “Dog” quadrant has a typical investment stance or “Harvest/Exit”. In reality though, it will not make sense to divest or exit businesses rapidly in this quadrant beacuse they will have low value and will distract management during the sale process. Frequently their weak competitive position leaves them incapable of being “harvested” either – if investment is reduced they may disappear very quickly.

    Rather they could be set up to operate with minimal resource drain on the rest of the portfolio, as the best people and all discretionary resources are diverted to more attractive businesses. Over time they will become a diminishing portion of the portfolio. Objectives of the Study Blackberry’s smart phone market share declined by more than 33 % and the company is losing its core so the objective of our project is to frame a turnaround strategy for blackberry which would help it to recover and get back at its position. Outcomes Expected from the Study

    The outcomes of the project will help to: Acknowledging the loopholes in the strategy placed by blackberry for its smart phones Reasons for its failure The appropriate strategy that should have been framed by the company How the ill-effects of the strategy placed can be mitigated so the company would be able to recover and then frame a suitable & turnaround strategy. Causes of Blackberry’s Failure and Current Trends BlackBerry’s failure to keep up with Apple and Google was a consequence of errors in its strategy and vision.

    Shortly after the release of the first iPhone, Verizon (blackberry partner) asked BlackBerry to create a touch screen “iPhone killer. They denied doing anything to counter that, as a result it turned out to be a bad move. Verizon left Blackberry and turned to Motorola and Google instead. Blackberry Failed to anticipate the consumers as they focused more on dominating the corporate market. They ignored the business customers who drove the Smartphone revolution. BlackBerry was blindsided by the emergence of the “app economy,” which drove massive adoption of iPhone and Android-based devices.

    BlackBerry failed to realize that Smartphone’s would evolve beyond mere communication devices to become full-fledged mobile entertainment hubs. BlackBerry insisted on producing phones with full keyboards, even after it became clear that many users preferred touch screens, which allowed for better video viewing and touch screen navigation. When BlackBerry finally did launch a touch screen device, it was seen as a poor imitation of the iPhone. RIM failed to evolve while it’s dominance quickly evaporated.

    The Blackberry Playbook is a good example of this: When consumers were showing a demand for high-performance tablet computers, RIM released the Blackberry tablet with no blackberry email or calendar support, and tied many of the device’s basic functions to the requirement of also owning a Blackberry phone, with all associated service charges. Other tablet computers, like iPad and Android tablets, did not have this requirement, and crushed Blackberry’s market share. If RIM focused on supply and demand, and less on telling people what they want according to RIM’s ability to siphon money via service charges, Blackberry would still be king.

    The new, new CEO John Chen is a horse of a different colour. For one thing, he is a complete outsider. For another, he has already accomplished one of the most difficult and most admired victories in business: Bringing a company back from near death. And that is more than a trick. According to that 12-year-old interview, Chen’s strategy was twofold: to look ahead to what the economy needed next, but also to forget about shareholders who want an instant return and instead work to satisfy employees and customers.

    Chen’s most recent executive position was CEO of Sybase, a maker of computer database software that was losing money and in crisis after having to restate its results as he took its helm in 1998. When he took over that company, it was in a similar position to BlackBerry’s today: it had very little credibility with Wall Street, posting a 1998 operating loss of $98 million. In 2010 he sold it to SAP for $5. 8 billion. He slashed expenses and began focusing on pursuing niche segments of the database market rather than competing with bigger software makers Oracle Corp and IBM across all segments of the mammoth industry.

    Marketing Issues With Blackberry Consumer electronics success begins with excellent products. The BlackBerry was once perceived as the very best smart phone available. It was exciting, emotional and it made people feel good. RIM sold BlackBerries on the strength of word-of-mouth recommendations. BlackBerries were aspirational, and people wanted to own one because friends and colleagues were so passionate about them but now the excitement and energy has shifted to iPhone and Android handsets. RIM enjoys none of that today.

    One reason could be attributed to the fact that it stopped making good smart-phones in favor of a poorly received tablet called the PlayBook. As a result of diverting talent, attention, resources, investment and innovation from the BlackBerry to the Playbook, the main strength of RIM – Blackberry got abandoned and its development and marketing of smart phone for a year or longer got hampered. If one has attained a measure of success then they must continue to innovate their products, services and marketing just to maintain their position. It

    is for sure that the competition is innovating aggressively, and they’ll pass by in no time if one stops doing the things that brought them success. RIM not only stopped releasing new BlackBerries while focusing on its PlayBook, it basically stopped talking to its customers about them for an extended period Consistent and aggressive innovation is required not only to attain success, but to maintain it. RIM’s management disagreed on who their customer was. Then co-CEO Mike Lazaridis felt the customer was the corporation. Others, probably including his counterpart Jim Balsillie, wanted to aim BlackBerry products at consumers.

    If the company doesn’t know exactly who their customer is, it is impossible to market. Language, messaging, platforms, branding and public relations change completely depending on the customers the company targets. There was a time when BlackBerry ruled the enterprise world. Countless businesses handed out BlackBerries to its workers thanks to its simple and effective way of giving constant and secure access to email. It was an industry standard but then along came the iPhone which added some desirability along with better web surfing and apps and the game changed.

    From being a byword for innovation ‘BlackBerry’ became a staid, boring, functional thing. Once the iPhone rolled into town, followed by Android devices, BlackBerry was struggling to compete, and simply didn’t innovated quick enough to keep its loyal following. Turnaround Strategy in Marketing As of the end of September 2013, 72 Million subscribers still use Blackberry, of that some 14 million remain enterprise class customers. BlackBerry announced that some 20 million people have signed up for BBM on Apple and Android devices in October, even if only 10-25% stay with the service, it is a significant inflection point.

    Blackberry can use this to build on their brand value as people will want to try Blackberry if they like BBM service, Blackberry can advertise its products in the BBM platform. Having 2-5million potential customers in the kitty will add lot of revenue to the company. Blackberry should return to concentrating mainly on what it does best: business communications for business people, Blackberry is more of a niche brand; there strategy of serving any and everyone has proved dreadful for them by creating confusion in the minds of their customers.

    They should keep concentrating on being an enterprise phone and should invest more in R&D for coming up with an Enterprise phones those benefit corporate more than what Apple and Samsung are providing. It was a right step to move into tablet segment but investing all the energy and resources just on Playbook and diverting away the attention from the core business of being a smartphone manufacturer was wrong. Blackberry should invest more on building its enterprise phones and focus attention towards re-building its smartphone business.

    Having a leader with a long term vision and goal is important for any organization to grow, for turnaround it is even more important. Blackberry has seen 3 CEO changes in the past 3 years. This has given a very volatile condition to the company. They should now go with the strategies that will be brought in by John Chen. John already has experience in turnaround as he played a crucial role in turnaround of Sybase. His role will play a vital part in turnaround of blackberry. Blackberry has witnessed tremendous growth opportunities in the emerging markets with average 15% growth rate since last 2 years.

    This implies they could introduce low cost product line-up to cater to these markets with strong emphasis on BBM. It could penetrate into these markets, using Blackberry’s brand recognition. It can take example of India where it had been growing at a rate of 22% y-o-y. However it should note that Samsung and Apple could also be considering this option. BlackBerry remains the most secure and un-fragmented solution in the industry. Its major competitive advantage is its security encryption feature. The company needs to convince potential customers about the need for security.

    S. A. The emergence of Samsung is due to its acceptance of Android OS platform which accounts over 80% of Smart phone market. The other reason for the losing Revenue is Blackberry Had invested around $950 million in its tablet ‘Playbook’ which was a flop and not able to deliver the required performance, the investment of the company is only increasing in R&D but then also its products are not able to deliver the required performance. The YoY change for Blackberry operating system is showing negative results i. e. -41. 6%. Balance sheet from 2010-13 Period Ending: 2013 2012 2011 2010 Current Assets

    Deal to Buy Blackberry: Blackberry first agreed to be bought by a consortium of Canadian investment companies for $4. 7bn in September in cash and taken private, in a last-ditch move to ensure the survival of one of the pioneers of the global smart phone industry. BlackBerry – whose handheld devices became so widely and compulsively used by the world’s business and political elite they were nicknamed “CrackBerrys” – has seen its market value plummet from a peak of $83bn in 2008 to just $4.

    2bn ahead of the announcement. Fairfax Financial, a Canadian firm that already owns 10% of BlackBerry, has agreed to join forced with an unnamed consortium of other buyers to acquire the company for $9 a share. The move would take BlackBerry private, removing it from a public listing on Nasdaq, where stocks have fallen from a high of $148 in June 2008 and now languish at about $8 a share. On the announcement, BlackBerry stock rose a modest 2% to $8. 85 a share, giving the company a market value of $4.

    65bn. The bid comes in the wake of BlackBerry’s admission that its turnaround strategy – based on the launch of a new operating system and handsets – had failed and that it would abandon the consumer market with the loss of 4500 jobs and report a $1bn operating loss in the Q2. The consortium is led by Prem Watsa’s Fairfax Financial, which holds a 10 per cent stake in the Ontario-based group. Deal Abandoned: Struggling smart phone maker Blackberry has fired its chief executive and abandoned a $4. 7bn (?

    3bn) rescue bid from its largest shareholder as it turned to a $1bn fundraising plan in a battle to stay afloat. The company said it will raise $1bn in convertible bonds instead of pursuing a deal with Fairfax Financial, its 10% shareholder. Fairfax, whose ability to raise the financing for its $4. 7bn bid was widely questioned, has pledged to buy $250m worth of the bonds. BlackBerry has now pegged its survival hopes on raising from institutional investors, including Fairfax, through a private placement of convertible debentures – a type of unsecured bond. The planned $4.

    7 billion buy-out by Fairfax Holdings did not happen, BlackBerry, not for want of trying, did not go private. Instead, the company got a $1 billion shot in the arm in a bid to keep its head above water while its newly appointed “interim” CEO, John Chen, works his magic. BlackBerry says it has taken measures to cut costs – but equally could see increasing pressure on margins if its business continues to decline. The company’s cash position could also be hit if suppliers begin demanding payments on shorter terms, which would mean paying cash for components before they can be sold as finished items.

    One major supplier, Jabil, warned in September that it might stop building parts for the company, which could completely kill off the handset business. BlackBerry burned through $500m of its cash in the last quarter leaving it with $2. 6bn in cash and equivalents. BlackBerry’s Plan C Enterprise put simply. Although BlackBerry is still likely to support and release new BB10 handsets, the days of it being a consumer-facing brand look to be over. “Instead of handsets, Blackberry will be looking at its enterprise services as its engine for recovery. ” How long will $1 billion last?

    Plan C will see BlackBerry reverting back to what it knows best: The Enterprise. How this will affect its handset business, however, remains to be seen, but it doesn’t look good –– consumer businesses require volume, lots of volume, and BB10 has not delivered the goods. Human Resource Issues with Blackberry: Blackberry had dual-CEO structure. Earlier in 2011 blackberry had two CEOs – Mike Lazardis, Jim Balsillie which often created problems in working of the organization as there was no unity of command. The company is planning to fire up to 40 percent of its staff, equating to 5,000 people in order to bring costs under control.

    Since 2011 company is in the path of reducing workforce. The upcoming CEO John Chen will be bringing some of the top executives from outside the company and change the structure of the company internally. These moves in blackberry have already led to demotivation in employees as they cannot be sure of their future in the company. Such emotions can lower morale and affect productivity. Employees cannot work efficiently with such an environment of lay-offs all around in the company. Growth of company will be affected directly because of this. Strategies to Turnaround

    Company need to invest even more energy in the people who remain after downsizing and layoffs. You will aid recovery; fuel productivity; boost morale, despite the loss; and minimize the damage to workplace trust. It is most important to reassure the people of their value to the organization. There is need to talk with each of them individually to let them know why and how they are valued; tell them what company feels they contribute to the effective, continuously improving work environment. Employees need reassurance about their security. They need reassurance about why the people who were let go in the downs

    Blackberry Turnaround Strategy. (2016, Aug 06). Retrieved from https://graduateway.com/blackberry-turnaround-strategy/

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