RIM managing explosiv growth. FINAL
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Research in Motion LTD.
Group A• Palani Babu - EMBA 151004
• Nithin Mohan - EMBA 151002
• Jovita Miranda - EMBA 151007
• Akhilesh Choudhary - EMBA 151005
• Rashid Al Suwaidi - EMBA 151034
• Frank Witt - EMBA 151003
• Awad Al Shamsi- EMBA151036
History and actual situation of Blackberry Company
• RIM Research in Motion LTD.: Design, Manufacturer and Marketing of BlackBerry products.
• World Leader in mobile communications market (2008)
• Company was founded in 1984 by Mike Lazaridis (23-year-old university student).
• 2008 is one of Canada’s largest company: Market Capitalization of $ 69,4 billion.
• 14 million subscribers worldwide and over $ 6billion in revenue (2007).
• Able to integrate e-mail, phone, instant messaging, SMS, internet, music camera, video radio, GPS, and other application.
• Popular in business world and organizations, that relied on sensitive information e.g. US Government and Financial institutions.
• 42% market share in North America.
Wireless communications market and smartphones
Situation end of 2007:
• Shift in telecommunication industry was moving demand from cellphones to smartphones.
• key competitors are emerging from RIM Palm, Sony Ericsson, Nokia, Motorola and the new Apple I Phone.
• 3 billion subscriber connections worldwide at end of 2007 with biggest markets: China, USA, India. In India there was a growth rate of 60%.
• With launch of IPHONE in June 2007, completion in smartphone market intensified.
• Predicted that in 2008 & 2009;500 million smart devices would be sold globally.
History of Blackberry Company
Company Situation early January 2008 I :
• Generation of revenue through complete BlackBerry solution: Software, handheld devices, services.
• 73% of revenue from handheld sales. • Before: handhelds are demanded by busy professionals.
• After: using these phones is social phenomenon. E.g. Crack berry.
• Facebook and games for Blackberry helped to make system popular among young people.
• Business model: Wireless carriers bundle black Berry handhelds and software with airtime and sell complete communication solution to end-users.
• +270 carrier partnerships in more than 110 countries worldwide.
• 58 % of revenues were generated in the US and 7.3 % in Canada.
History of Blackberry Company
Company Situation early January 2008 II:
Extreme expansion the last years: Revenue 2007 increased 98% from previous year, but the space and capacity in the company was not able to adjust to the new reality in such short time. The number of 1400 software engineers in R&D did not increase according growth (should have doubled).
Question asked by R&D Director: “how do you change the engine, while you are speeding along at 200 kilometers per hour?
Analysis of the Smartphone Market
Competing Platform – Worldwide Share 2007
RIM’s Market share in North America
• Apple’s announcement of actively pursue the North American Market by adoption of innovation strategy. It attracted corporate users to adopt to Iphone which had the push-email and calendar integration using the Active Syn Direct Push technology.
• Microsoft announcement of end-to-end solution for enterprise customer as well as desktop-grade web browsing for Windows Mobile enabled phones.
• Google also entered the market by introduction of android, an open and free mobile platform, which included an OS, middleware and key application.
Intensification of Rivalry
• Analyst 1:⁻ Apple’s innovation in its mobile phone user interface has prompted
a lot of design activity among competitors. A vendor with only one smart phone design, no matter how good the design is, will soon struggle. A broad, continually refreshed portfolio is needed to retain and grown share in this dynamic market.
• Analyst 2: ⁻ There still aren’t many trusted alternatives for business class
mobile email. This company could be one of the world’s biggest handset manufacturers one day.
Analysts Observations in early 2008
• RIM employed 2100 R&D experts
• R&D Team increased 10 times within 10 years
R&D at RIM
Software Engi-neers; 40%
Testing Team; 40%
Support team; 20%
Year 2000 Year 20070
RIM increased its R& D spend by 10
times within 5 years
2000 2001 2002 2003 2004 2005 2006 20070
Employee growth at RIM
• Ability to work collaboratively
• Ability to work Collegially
• Minimal processes
• Dynamic environment
• High level of participation in decision making
RIM Headquarter culture
• R&D and Engineering were the heart and soul of RIM
• RIM employed people with different R&D area of expertise
• RIM guarded through a number of patents, Copyright & Contractual agreements.
• R&D team were under tremendous pressure because of exponential growth in sales , competition and industry changes.
• RIM maintain its R&D spending as a consistent % of total sales.
R&D @ RIM
• Maintaining Unique Culture
• Low Employee Turnover
• RIM recognized as Canada’s 10 Most Admired Corporate Cultures
• Ability to work Collaboratively and collegially
• Team Participation in decision making process
• Dynamic Environment
RIM vs Competitors
• Do What we do now , Only More of It.
• Grow and Expand Existing Geographies
• Increase Acquisitions
• Go Global
Managing Explosive Growth
• RIM was successful in Local Recruitment mainly focused in University of Waterloo.
• They planned to expand Co-Op Programs to other universities
• They form a global scouting group to find the best talents.
• They posted Job Openings worldwide
• Favorable conditions for attracting talents were Canada’s standard of living and stronger Canadian Dollars
“Do What we do now, Only More of It”
• RIM established R&D Operations beyond Waterloo in Ottawa, Mississauga, Dallas and Chicago.
• Expanding Products and technology development facilities in locations in Fort Lauderdale by recruiting through general Job fairs
• To ensure geographical expansion strategically executed.
• Cost of talents in various locations to be considered. E.g. Wage in Palo Alto is a lot different from Wage in Waterloo.
• Internal Resistance in the team to expand R&D outside Waterloo.
• RIM laid out several criteria's to select new locations e.g. pool of talent available, existing base of Software/hardware Companies, cities or regions with Universities and technical programs.
“Grow and Expand Existing Geographies”
• Another Strategy - Bringing people on board through Acquisitions
• Growth by acquisitions was a common practice in these sectors.
• Economic downturn during 2008 increased potential for opportunistic acquisitions.
RIM Options to Manage Growth
• RIM had expanded beyond Waterloo in 4 different cities over the last 5 years. Expanding rapidly was good, however, they needed to consider the geographically situations and strategize well. For instance: The salaries of engineers in Palo Alto was much higher than in Waterloo and the competition was far more intense. Turnover cost was high as people were wooed by top high tech companies in the region.
• There were however, people who resisted the idea of geographically expanding as this would lessen the control and socially and individually affect people who will be asked to move to a different country with a different cultural background.
• Most of the top software companies kept their developers in one location, thus not going in for the expansion strategy.
• RIM however, moved into the expansion strategy by laying down a selection criteria for choosing the region:
The area should already have a pool of talented and skilled workers.
The region should be a home of top software companies ensuring the availability of highly skilled work force
The region should have Universities with strong technical programs.
Grow and Expand Geographically
• RIM had success by bringing people on board through acquisitions. RIM had acquired Slangslot a start up company in Israel that developed code which displayed and could input Chinese characters – key to bringing BB in the Asian and other foreign markets.
• Growth by acquisitions was a common process in high tech and telecommunication sectors.
• Google has made its initial move to Waterloo in 2006 through acquisition of small wireless software company, subsequently discontinuing the company’s web browser product, making it a purchase of talent and intellectual property.
• The European mobile telecommunications market, in particular, was highly nationalistic with end users favoring home grown companies over foreign solutions.
Grow through Acquisitions
• With most of the R & D work still done in Waterloo, with some core work also being done in Ottawa and product and technology sites throughout US and UK RIM wanted to still explore global expansion.
• RIM estimated that’s all new hires in 2008, likely half would have to be outside of Canada.
• Some of RIM’s competitors had a long history of global expansion for R & D. For instance, Symbian was present in Beijing, UK and India. Motorola was present in China, Vietnam and South Korea.
• China was the main hub of innovation and doubled its patent applications every 2 years..
• Partnering with major research institutes to source top talent appeared to be a fairly common strategy.
• For RIM going global was challenging because of a number of reasons:
The BB source code had to be protected
Restrictions on cryptographic software
Due to national security Governments of Canada, US, Russia and China regulated the import and export of encrypted products.
The US Government did not accept any encrypted products from China as the Government of China had ability to access the keys to data encrypted in China
• Even if these hurdles would be overcome there were other challenges that RIM would have to face to go global:
Organizational design, communication and integration between the head office and regional offices.
Eastern European countries were emerging as strong contenders for quality assurance testing.
RIM was not ready to manage multi country research offices and the mindset in Waterloo was still that the core engineers had to be perceived as valuable.
Going Global contd..
• RIM expected to make 70% growth in sales with additional 2.2 million BB subscribers by May 2008.
• RIM knew that their software developers were their key assets.
• However, RIM also realized that the competition was increasing and they had not tapped global opportunities fully
• They needed a strong strategy.