Research In Motion: Case Analysis
Research In Motion: Case Analysis
Table of Contents
Research In Motion (RIM) is a Canadian multinational telecommunications company that designs, manufactures and sells cellular phones and other communication devices. RIM’s success started in August 1998 when they launched the inter@active pager 950. In 2003 RIM became one of the most recognized brand names with the introduction of their most popular device the BlackBerry. In June 2011, RIM announced that their revenue was going to drop for the first time in eleven years. From June 2008 to June 2011, RIM's shareholders lost almost $70 billion (The Economic Times 2011). The following paper will analyze and compare different strategies and which factors have ultimately led to RIM’s recent financial decline.
* Buyer Power- Moderate to low
There are a few different factors that affect buyer power. One is the volume that a buyer demands. Typically, a single consumer will only need one cell phone, possibly two if they need a work cell phone. Another factor affecting buyer power is the amount of buyers relative to the amount of firms in the industry. In Canada, there are few different brands a consumer can choose from if they are unsatisfied with their BlackBerry product. Outside of North America, the selection grows greatly. There are many more choices of product and minimal differentiation (other than the BBM feature which is unique to BlackBerry) which increases the consumers buying power. However, the price structure is generally the same between similar products. Additionally, consumer’s buying power is increased due to the fact that cell phone’s demand is highly elastic and that consumers don’t have to buy new products. Also, buyers have all the necessary information to make decisions. Lastly, at the end of 2011 there were approximately 5.9 billion mobile subscribers (Global Mobile Statistics, 2012). Because there are billions of customers, one customer can’t make a difference to RIM’s decisions or strategies. Therefore the consumer’s power in this industry is moderate to low. * Supplier Power- Low
The technology industry is a highly competitive industry. With a company as large as RIM, the suppliers can’t risk them taking their business to another supplier. In 2011, RIM’s market share among smartphone producers was 10.4% (4th behind Nokia, Apple, and Samsung). Electronics manufacturer Elcoteq SE, which accounts for one third of RIM's costs, makes 20 % of its annual sales through RIM (RIM Pressuring Suppliers, 2009). RIM’s Blackberry OS is being set to be open sourced and will increase RIM’s sales and competitiveness and will decrease the supplier’s power even more (Tolentino, 2012). There are many providers for the hardware of RIM’s products that RIM has the bargaining power. * Threat of New Entrants- Low
Getting into the industry of selling smart phones would be extremely difficult if not impossible because it is such an innovative field. The capital requirements would be high between research and development costs and manufacturing costs. Manufacturing costs for a Torch phone is $183.04/ phone and up to $194.05 for an iPhone 4 (Perez 2011). Upgrades and changes are constantly being made to smart phones and would be impossible for a new company to keep up with a company like RIM or Apple. Differentiation also plays an important role in the smart phone industry. A firm has to be able to afford to be innovative and make the necessary changes to add value to their product. Brand equity is another important entry barrier. Brand recognition sells smartphones and people are buying the name as much as the product....