Report on the

Blackberry between change and forward

Study Case Analysis

White Team members:

Georgiana Brdescu Ioana Gheorghe Iulia Boeru Matei uic Mihai tefnescu
Master in Business Management, 1st year Managerial Economics 23.10.2013

1. Introduction As members of a consulting team for BlackBerry Ltd., we had to make a proposal to the board of directors for the business strategy for the next years. Based on the concept of opportunity cost and the use of concepts learned in the chapter The Fundamentals of Managerial Economics, we have analyzed and identified one of the two slogans (Change and Forward) that should be used in the marketing strategy of Blackberry. Our teams answer took into account the actual context of the company and the factors (both internal and external) that influence the activity of the company by creating a SWOT analysis. Afterwards, based on the facts we have discovered we moved towards a solution framework called ERIC (Eliminate, Reduce, Increase Create) that in the end helped us reach a final conclusion.

2. Major Issues It was really interesting to analyze a huge company like Blackberry Ltd. not only due to its history and dimension but also to the expending market it is activating in. Moreover, the fact that now, unfortunately the company is on the edge of the abyss made our strategic decision quite a complicate and serious one.

3. Analysis A. The SWOT Analisys a. External factors In analyzing the companys internal and external features and inf luences we used the model proposed by Philip Kotler. For evaluating favorable occasions on the market (Opportunities) we used the so called Analysis of Market Opportunities in order to establish the level of attractiveness and success probability of each of the factors identified. Figure 1: Opportunities Matrix Success Probability High High Low

Attractiveness Low

Source: P. Kotler, K. Keller, Marketings Management, page 75

Master in Business Management, 1st year Managerial Economics 23.10.2013

1st square opportunities: Increasing and developing market; Increase in demand for smart phones; Offered to be bought.

2nd square opportunities: Developing of smart watch market; Existence of cheaper workforce. 3rd square opportunities: Demand from traditional corporate customers. 4th square opportunities: Free operating system (Android).

The best occasions/opportunities are situated in the 1st square and the ones that do not deserve being taken into consideration are in square 4. The facts mentioned in boxes 2 and 3 should be monitored and kept under control just in case some changes occur in their attractiveness level or probability of success. Regarding threats, we have analyzed them using the Threats matrix relating to their probability of occurrence and level of impact on the organization. Figure 2: Threats Matrix Probability of Occurrence High High Low

Level of Impact on the organization

3
Low

Source: P. Kotler, K. Keller, Marketings Management, page 75 1st square threats: Strong competition (Android and iOS); The touch trend.
Master in Business Management, 1st year Managerial Economics 23.10.2013

2nd square threats: Potential investors are losing their interests in mobile devices producers that are not using modern operating systems, such as Android or iOS. 3rd square threats: none identified; 4th square threats: none identified;

Again, the most serious threats are situated in the 1st square and the ones that do not deserve being taken into consideration are in square 4. The facts mentioned in boxes 2 and 3 should be monitored and kept under control just in case some changes occur in their impact level or probability of occurrence.

b. Internal factors In order to determine the strengths and the weaknesses of Blackberry Ltd. we took into consideration several aspects related to marketing, financial situation, production and technological process, management etc, again following Philip Kotlers model (check Figure 4). Figure 4: Control checklist for analyzing strengths and weaknesses Performance
Major Strength Minor Strength Neutral Minor Weakness Major Weakness High

Importance
Medium Low

MARKETING 1.Company reputation 2.Market share 3.Customer satisfaction 4.Customer retention 5.Product quality x x x x x x x x x x

Master in Business Management, 1st year Managerial Economics 23.10.2013

6.Service quality 7.Pricing effectiveness 8. Distribution effectiveness 9.Promotion effectiveness 10.Sales force effectiveness 11.Innovation effectiveness 12.Geographical coverage FINANCE 13.Cost or availability of capital 14.Cash flow 15.Finacial stability MANUFACTURING 16.Facilities 17.Economies of scale 18.Capacity 19.Able, dedicated workforce 20.Ability to produce on time 21.Technical manufacturing skills

x x

x x

x x

x x

x x

x x

x x

x x

Master in Business Management, 1st year Managerial Economics 23.10.2013

ORGANIZATION 22.Visionary, capable leadership 23.Dedicated employees 24.Entrepreneurial orientation 25.Flexible or responsive x x x x x x x x

After discovering different positive or negative aspects we analyzed their importance and in the end choose the most suitable ones. Taking into consideration only relevant aspect of the external and internal factors and influences, the following SWOT matrix arise (Figure4):

Strenghts:
- Tactile feedback; - Keyboard + touch combination; -Service quality , Mobile Device Management (MDM);

Weaknesess: -Disastrous financial results; -Dual CEO structure;

-resination of marketing manager;

- patent infringements; -Unappealing hardware and operating system, poor browsing capabilities; -small market share; - market drift - unflexible; - uneffective sales force; -lower company reputation.

- Lasting battery;
- manifacturing afcilities and capacity; - On time production; -Geographical coverage.

SWOT

Opportunities: -Increasing and developing market; -Increase in demand for smart phones; -Offered to be bought.

Threaths: -Strong competition (Android and iOS); -The touch trend.

Master in Business Management, 1st year Managerial Economics 23.10.2013

B. Detailed financial situation analysis Table 1 and 2: Evolution of financial results - BlackBerry Ltd. Fiscal Year Sales ($ million) Operating Income ($ million) 2009 2010 2011 2012 2013 11,065 14,953 19,907 18,508 11,073 2,722 3,507 4,739 1,164 (628) 1,893 2,457 Return 3,444 2,199 (317) assets Return equity Employees 12,700 on average -43.43% on average -30.26% Net Income ($ million) Net profit margin Operating margin EBITD margin Indicators Q3 '13) -61.35% -91.04% (Aug

Source: Google Finance Figure 4: Share price evolution (Oct. 2012 Oct. 2013)

Master in Business Management, 1st year Managerial Economics 23.10.2013

4. Alternatives
Change vs. Forward

Focus its remaining resources on software and services for corporation Replacement of operating system

Focus on corporate niches

CHANGE

Relocate work force

FORWARD

Tactile Feedback Traditional customers

Mobile device management (enterprise server)

Create iMessage equivalent

New management
Joint ventures, strategic partnerships or a sale of the company New competences

Keep using the same battery system

Freeware operating system

Master in Business Management, 1st year Managerial Economics 23.10.2013

5. Proposed Solution/ Action Plan Considering all the things mentioned above our final strategic decision is Change. Of course, if we werent to choose just one option we would have continued with the forward factors but implement change in most of the sectors. Given the current situation of Blackberry Ltd. there is not too much to go forward with so the White Team final decision is definitely related to change. How to do it? Check the following matrix: The ERIC Framework

Eliminate: -Current operating system;

Reduce:

- Dual management strategy;

- The unappealing hardware.

-Operating systems maintenance and development costs.

Increase
- Shareholders and clients confidence; - Funds;

ERIC

Create:

- Focus on corporate niches;

---Selling the company

- Marketing research and promotion;

- Browsing quality.

-Possible joint ventures; - Strategic partnerships or alliances; - Pioneering on smart watch or other developing related market. -- iMessage equi-valent -New competences;

Relating to the real context of the company and to what we have read about, our opinion of what they will actually do is that they will probably accept the buying offer of 4.7 billion $.

Master in Business Management, 1st year Managerial Economics 23.10.2013