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RIM Case Study – Research in Motion

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    Research in Motion is known to be a charitable company, with its two top ranking officers contributing large sums of money to other organizations. RIM believes that it is imperative that the company gives back to the community. Balsillie and Lazaridis both share this sentiment, evident by their significant donations and contributions to Kitchener-Waterloo based organizations.

    Research in Motion’s main target market with the Blackberry has been the business sector. RIM uses simple marketing strategies to catch this market’s attention, and it has proven to work. The company relies on a strategy based on consumer loyalty and brand loyalty to ensure a large customer base with high demand for their products. They are utilizing the same strategy with the Pearl, now aimed at the consumer market.

    Using the Boston Consulting Group Matrix, we can see that the Blackberry falls under the category of a star. The Blackberry has put itself in a strong market position, making them leaders in the PDA business. Coupled with a high business growth rate, the Blackberry should aim to hold its current market shares. The Pearl on the other hand, falls under the category of a question mark. The Pearl is also experiencing a high growth rate, as evidenced by RIM’s expansion success. However, the Pearl has a relatively low market share, since the mobile phone market already has other established companies like Nokia, Samsung, Sony, and Apple. RIM’s strategy with Pearl should either be to increase market shares to increase cash flow, or to consider whether Pearl will be profitable in the long run.

    Research in Motion utilizes a functional departmentalization style, dividing the work process into departments according to function. This departmentalization type is effective for RIM. However, RIM could possibly improve efficiency by changing shifting to product departmentalization. This is because their products are of a different type and are aimed at different markets. Focusing on strengthening each major product area may provide RIM with a more effective department style.

    RIM currently has two CEOs, Balsillie and Lazaridis. A problem that may arise because of this is a conflict of interests or plans. This may result to internal conflict between the CEOs. Also, since both individuals specialize in different fields, changing the two-CEO style at RIM may provide both Balsillie and Lazaridis more opportunities to improve their specializations.

    Blackberry has provided the business market with an innovative device which has allowed individuals to perform a plethora of business applications while remaining mobile. This has led to a fast-paced business environment and has created a demand for devices that can keep individuals updated for their business. This provides RIM with an advantage, because RIM has a solid grip on this particular market. However, this may cause RIM to suffer from a lack of innovation in the business market, because of the current focus of demand.

    Balsillie and Lazaridis both have different specializations. Balsillie’s strength comes from his charisma and business style. He is knowledgeable in the field of business and commerce, allowing him to focus on RIM’s corporate and marketing strategies. Lazaridis on the other hand is an engineer, and his strengths lie in technology innovation. He is able to utilize his skills for manufacturing and technical aspects.

    One of RIM’s major competitors in the smartphone industry is the iPhone, created by Apple. Apple has put large focus on marketing its brand image of being hip and user friendly, thus having a firm hold on the consumer market (Cook & Phillips, 2006). Apple products such as the Macintosh laptops and PCs and the iPod have showcased this image. This strategy used by Apple has given them an advantage when dealing with the consumer market, which is Apple’s target market. RIM has found Apple to be a significant threat, causing their market share for smartphone to decrease upon the iPhone’s entry into the market (The Record, 2008) .This may be due to the fact that RIM’s strongest market is the business market.

    Another major competitor that RIM faces is Motorola. Motorola has been a leading producer of cellular phones and smartphones in the past decade. The company relies on marketing power to gain their consumer base. Motorola’s cellular phones have simple yet catching names that effectively market both their brand and the phone’s design (Mridul, 2007). Compared to RIM simplistic marketing techniques, Motorola adapts a louder and more vibrant marketing style.

    On November 2001, NTP filed a lawsuit against RIM. NTP claimed that RIM had violated their patents regarding the software used in the Blackberry. The case was brought to the United States District Court for the Eastern District of Virginia and in 2002; the case was decided in favor of NTP. RIM had to pay NTP 5.7% of Blackberry sales in the U.S. or $23.1 million. The court had also decided to ban further sales of the Blackberry unit in the United States. RIM appealed to the court’s decision and the ban was stayed. In March 2005, RIM and NTP arranged a $450 million settlement. However, in June of the same year, negotiations broke down and the case returned to the court to confirm the March arrangement.

    The U.S. Appeals Court refused to change the ruling and RIM decided to appeal to the U.S. Supreme Court. On October 2005, RIM’s appeal was again rejected. On November 2005, judges refused to force NTP to agree with the current $450 million that RIM had offered. NTP had offered to settle the case in exchange for a 5.7 cent royalty rate for the patents. NTP asked for an immediate restriction of Blackberry sales in 30 days on February 2005. Along with this, was a $126 million fine for damages and royalty payments. The court however, declined to NTP’s terms. Finally, on March 3, 2006, RIM and NTP had settled their dispute. RIM agreed to pay $612.5 million to NTP to settle all claims and patent permission for the continued use of the Blackberry. (CBC News, 2008)

    SWOT Analysis for Research in Motions (RIM)

    Strengths:

    • Firm customer base via the business market gives the company reputation
    • Large market shares in the customer business market.

    Weaknesses:

    • 2-CEO Style may lead to leadership dispute and internal problems
    • Functional departmentalization may cause the company to operate at a sub-optimal level.

    Opportunities:

    • Loyal customer base allows for a assurance in producing new products
    • Established position in the PDA niche.

    Threats:

    • Strong competition in both the consumer and business markets may cause demand for products to decrease
    •  Large demand for a niche product may cause lack of innovation.

    References

    1. CBC News. (2008, June 26). CBC News IN Depth: Research in Motion. Retrieved 2009, from CBC News: http://www.cbc.ca/news/background/rim/
    2. Cook, M., & Phillips, D. (2006, December 26). 3 Little Piggies of Brand Image: Microsoft, Apple, and Open Source. Retrieved 2009, from Internet Marketing Monitor: http://www.internetmarketingmonitor.org/0357/3-little-piggies-of-brand-image-microsoft-apple-and-open-source.html
    3. Mridul, C. (2007, March 17). Nokia’s marketing strategy: A need for change. Retrieved April 2009, from MeriNews: http://www.merinews.com/catFull.jsp?articleID=124478
    4. The Record. (2008, April 29). RIM vs. the competition: An analysis. Retrieved 2009, from The Record: http://therecord.metrolandwest.com/News/article/343328

     

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