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FORE SCHOOL OF MANAGEMENT
Project Report: Research in Motion
Strategy Management: FMG20C Group 8
Major Project report submitted in partial fulfillment of PGDM 2011-13 focusing on the field of Strategy Management on Research in Motion, and their flagship brand Blackberry.
Rishi Kalantri 201128
Samriddh Nagpal 201141
Shefali Gupta 201151
Udit Bubna 201168
Vaibhav Aggarwal 201171
Veeneet Jain 201173
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Executive Summary
This project report titled “Research in Motion”, is concerned with the analysis of the issues
being faced by the organisation Research in Motion, in the competitive environment in which
it is operating. This report also contrasts the earlier and the current position of R.I.M. and
analyses its environment and its strategy it has adopted in the recent times.
The objectives of the study are (i) To understand the competitive environment in which
R.I.M. is operating. (ii) To identify and describe the market scenario and the issues being
faced by R.I.M. (iii) To analyse the organisation with respect to its Strengths, Weakness, its
opportunities and the threats it faces, (iv) To understand the Political, Social, Environmental
and Legal aspects of the organisation with respect to its environment, (v) To provide an
insight of the various forces the organisation is facing from its competitors, or substitutes. (vi)
To give an insight to the financial position of the organisation and provide a trend analysis
based on the same, (vii) To provide possible solutions to R.I.M. and give suggestions for the
implementing the solutions.
This study is divided into 4 chapters which give an insight to the strategies outlined by R.I.M.
and provide possible alternative solutions to R.I.M. based on the analysis.
The data has been collected from the annual reports of the organisation. Many different tools
were used by the researchers to analyse the strategies adopted by R.I.M. and also to
understand how the dynamic environment of the organisation has been changing over the
years. These tools namely: SWOT analysis, PEST analysis and Porter’s 5 forces model gives
a detailed insight to the above. Financial analysis has also been performed based on the data
and company’s financial health has been analysed.
The major findings of the study are (i) R.I.M. didn’t take the changing environment into
consideration and they stuck with their propriety systems without upgrading to compete with
its competitors. (ii) R.I.M. had huge inventory due to low sales of its blackberry handsets
which affected their bottom line. (iiii) R.I.M. was losing its market share at a rapid pace and
hence had to have a huge invest in R&D which reduced their operating revenues. (iv) R.I.M.
has been working in developing its Blackberry 10 operating systems which it hopes will give
a competitive edge over its competitors.
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Table of Contents
EXECUTIVE SUMMARY .................................................................................................................................. I
CHAPTER 1: INTRODUCTION ......................................................................................................................... 1
COMPANY PROFILE ................................................................................................................................................. 3
PRODUCT & SERVICE DETAILS ................................................................................................................................... 6
COMPETITOR PROFILE .............................................................................................................................................. 6
CHAPTER2: ISSUES: IDENTIFICATION & DETAILED DESCRIPTION .................................................................... 8
MARKET SCENARIO ................................................................................................................................................. 8
ISSUES FACED BY RIM .............................................................................................................................................. 8
CHAPTER 3: ANALYSIS OF ISSUES ................................................................................................................ 10
SWOT ANALYSIS .................................................................................................................................................. 10
PEST ANALYSIS OF RESEARCH IN MOTION................................................................................................................. 11
PORTERS FIVE FORCES MODEL: RIM INDUSTRY ......................................................................................................... 12
Industry Statistics: ....................................................................................................................................... 14
FINANCIAL STATEMENT ANALYSIS ............................................................................................................................. 16
RATIO ANALYSIS ................................................................................................................................................... 18
CHAPTER 4: POSSIBLE SOLUTIONS .............................................................................................................. 21
ALTERNATIVE 1 .................................................................................................................................................... 21
ALTERNATIVE 2 .................................................................................................................................................... 21
ALTERNATIVE 3 .................................................................................................................................................... 22
RECOMMENDATIONS ............................................................................................................................................. 22
REFERENCES.................................................................................................................................................. I
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Table of Figures
FIGURE 1: BLACKBERRY ARCHITECTURE ............................................................................................................................ 4
FIGURE 2: BLACKBERRY ENTERPRISE SERVER ..................................................................................................................... 5
FIGURE 3: PRODUCT & SERVICE PORTFOLIO ..................................................................................................................... 6
FIGURE 4: SWOT ANALYSIS ........................................................................................................................................ 10
FIGURE 5: PORTERS FIVE FORCES MODEL....................................................................................................................... 12
FIGURE 6: MOBILE OPERATING SYSTEM MARKET SHARE GRAPH ........................................................................................ 15
FIGURE 7: SMARTPHONE MARKET SHARE GRAPH ............................................................................................................ 16
FIGURE 8: FINANCIAL ANALYSIS .................................................................................................................................... 17
FIGURE 9: INVENTORY ................................................................................................................................................ 18
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Table of Exhibits
EXHIBIT 1: BALANCE SHEET ............................................................................................................................................ I
EXHIBIT 2: PROFIT & LOSS STATEMENTS ......................................................................................................................... III
EXHIBIT 3: CASH FLOW STATEMENT ............................................................................................................................... IV
EXHIBIT 4: RATIO CALCULATION ..................................................................................................................................... V
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Chapter 1: Introduction
Research in Motion Limited (RIM) is a Canadian telecommunication and wireless equipment
company best known as the developer of the BlackBerry smartphone and was founded
by Mike Lazaridis in 1984. RIM is headquartered in Waterloo, Ontario, Canada. It is
considered as the leader in introducing the wireless innovations in its product portfolio. All
these products and services help the people around the globe to stay connected to the people
and content that matter most throughout their day.
It is one of those players that make their own operating systems as well as the hardware
devices. Unlike many others who are in either of the one domain. This actually gives them an
advantage over many others. Current Chief Executive Officer (CEO) at Research in Motion is
Thorsten Heins, and he is leading them to new product line with Blackberry 10 operating
systems.
Industry Background
World telecom industry is an uprising industry, proceeding towards a goal of achieving two
third of the world's telecom connections. Over the past few years information and
communications technology has changed in a dramatic manner and as a result of that world
telecom industry is going to be a booming industry. Substantial economic growth and
mounting population enable the rapid growth of this industry.
Telecommunication industry has been revolutionized with the introduction of wireless
communication technology. A number of companies are taking on the advantage of these by
coming up with the variety of offerings. The world's effective capacity to exchange
information through two-way telecommunication networks grew from 281 petabytes of
(optimally compressed) information in 1986, to 471 petabytes in 1993, to 2.2 (optimally
compressed) exabytes in 2000, and to 65 (optimally compressed) exabytes in 2007. And in
numerical terms, service revenue of the global telecommunications industry was estimated to
be $1.7 trillion in 2008, and is expected to touch $2.7 trillion by 2013.
Telecommunications has weathered the downturn and subsequent economic uncertainty and
volatility relatively well compared to many other sectors. Looking ahead to future structural
trends in the sector, players in Europe and other developed markets are likely to benefit from
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some easing of the regulations on mobile termination rates, while landline is set to see the
pace of its structural decline low down. More generally, the outlook is positive as smartphone
growth opens doors to new opportunities in the sector.
But still there exist a lot of risks in the telecom industry that severely affect the operations of
any global company such as Blackberry.
Risks in telecom industry
• Compliance threats — originating in politics, law, regulation or corporate
governance
• Operational threats — impacting the processes, systems, people and overall value
chain of a business
• Strategic threats — related to customers, competitors and investors
• Financial threats — stemming from volatility in the markets and in the real economy
Popularity of BlackBerry
Initially the blackberry positioned itself into the market as a corporate product that is used by
the more and more sophisticated professionals to remain in contact with the contents like
mails and web browsing etc.Its true customers weren’t its users but the people who run
corporate information-technology departments were the major users of these most
sophisticated software. This was probably because BlackBerry gave them two of the most
crucial services components: reliability and security.
But over the time period, there has been a growing popularity of smart phones in the
marketplace and young generation are also migrating towards these devices. The striking
difference in the usage pattern of these professionals and youngster are the purposes for
which these people prefer them.
• Web browsing
• Networking
• Applications
• Messaging
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In this regard the blackberry has done pretty well done job. Blackberries are versatile and not
just meant for corporate people, which is that People are just realizing now. They enhance the
connectivity between the people with things like blackberry messenger which has grown
extremely popular among young. So it has actually created a market for its own that
constitutes the people who value being connected to world.
But, over the time period it got stuck in the intense competition by companies like Apple.
They didn’t change with the time and couldn’t realize the competition coming from the
software like Android. They were made for business people and lack of this consumerism had
proved disastrous for them. They couldn’t keep a track with the changing consumer
perceptions. The popularity of others kept increasing and RIM’s market share fell. Even the
things like a touch screen phone went unrecognized by blackberry.
Company Profile
Research In Motion (RIM) is a leader in the worldwide mobile communications market and
the company behind the award-winning Blackberry solution. The innovative and award-
winning BlackBerry product line includes best-in-class smartphones, as well as software for
both enterprises and small businesses.
The integration of BlackBerry smartphones and software provides mobile access to email,
applications and more. It also allows virtual real-time communication, so you can stay in
touch and up-to-date with the people and things that matter most.
Blackberry
Blackberry is a wireless handheld device introduced in 1999 by the Canadian company
Research in Motion (RIM); it delivers information over the wireless data networks of mobile
phone service companies.
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Figure 1: Blackberry Architecture
BlackBerry Enterprise Server
BlackBerry enterprise server software is the link between BlackBerry smartphones, enterprise
applications and wireless networks that extends communications and corporate data to your
mobile users. With Blackberry Enterprise Server software, your employees can access their
Microsoft Exchange, IBM Lotus Domino or Novell GroupWise email on-the-go on a
BlackBerry smartphone. They’ll also have access to calendar, contacts, tasks, notes, instant
messaging, web-based and enterprise applications.
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Figure 2: Blackberry Enterprise Server
RIM’s Blue Ocean Strategy
RIM's BlackBerry launch was a Blue Ocean strategic move because the company not only
created technology innovation but also created superior buyer value innovation as well.
Breaking away from traditional cell phone and pager competition, Blackberry offered a new
type of wireless handheld solution for companies. It created a new market space focused on
delivering secure company email access to roaming employees. Blackberries facilitated
employees to send and receive emails practically anywhere and anytime without physical
presence in the office. So companies that adopted Blackberries saved time and money. Also,
there was no need to install remote client software because RIM offered a turnkey,
centralized enterprise server and software solution. Since Blackberries were easy to use and
had simple user interfaces and a limited number of contextualized options to choose from,
companies also saved training and support costs.
Most importantly, the Blackberry created a highly secure offering for companies because all
emails and their contents could be protected behind their corporate firewalls. If a single
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device was lost or stolen, the company could easily disable it from its central control server.
Finally through Blackberry and blue ocean strategy, RIM entered a niche market.
Product & Service Details
Product lines of RIM can be divided into two categories:
Product
These include the tangible goods produced by the company and sold into the market like
tablets, smartphones as well as the accessories to protect them.
Services
The Blackberry Service Offering provides connectivity between an Exchange mailbox and
the wireless Blackberry device, providing the ability to send and receive messages instantly,
open and review attachments, views our calendar or access contact information.
Figure 3: Product & Service Portfolio
Competitor Profile
There used to be a time when Blackberry was the leader in the smart phones market and
development of the software for hand-held devices. But recently a lot of competition has
come in this segment with the existing strong players as well as new players getting a
foothold.
RIM faces competition basically from two main kinds:
Offerings
Product
Accessories Smartphones Tablets
Services
Blackberry OSApp world
and Messenger
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• One who make their devices themselves • Other who build on OS to be used by above kind of companies
The biggest competitor for RIM owned Blackberry is “Apple”,they make their own devices
as well as OS. They manufacture both Smart phones as well as well selling iPads. So in pure
domain of RIM, Apple poses the biggest threat. And the other competitors include:
In the category of smart phones
1. Nokia 2. Samsung 3. LG
Above companies make their own devices.
As per the service offerings are considered; there are the companies that rely on their OS for
some other companies.
4. Microsoft with their Windows Phone 7 5. Google with their Android operating system.
BlackBerry has struggled to compete against Android and Apple and its market share has
plunged in recent years, leading to speculation that it will be unable to survive as an
independent business
Google’s android version has posed a major threat to blackberry as it has the tie-ups with the
various brands like Samsung, Sony Ericsson, Motorola, HTC etc. this gives Google a wide
base and has actually reduced the price at which these devices are available.
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Chapter2: Issues: Identification & Detailed Description
Market Scenario
Smartphone market around the world has been stormed by the presence of huge brand
organizations and their new innovative products. Companies such as Google, Apple have
their flagship products with Apple’s iPhone and Google’s Android Mobile/ Tablet operating
system. These products have developed a cult image resulting in a brand following like no
other product in the market. Established companies like Nokia, Blackberry have lost out on
the increasing market because of not collaborating with these organizations.
Core competence of Blackberry has been the innovative product offerings that it could
provide its consumers coupled with secure data transmission in order to be the most preferred
option for enterprise data transmission.
Issues faced by RIM
RIM has been facing many issues in the competitive environment it is operating in. These
issues are discussed in detail. They are as follows:
1. Competition from other manufacturers
RIM is facing stiff competition from Google Inc Software Android & Apple Inc
iPhone. The reason being lack of innovation, weak marketing strategies & RIM’s
shifting of focus from Business Phone to Consumer Phone. Blackberry smartphones
of Research in Motion failed to compete with flamboyant, user–friendly and customer
oriented smartphones from Apple and other competitors run on Google’s Android
operating system.
2. Reliability of RIM Servers
Frequent outages in RIM server has been a concern for the company and also
Blackberry users are having doubts about the reliability of the Server.
3. Service offering by Blackberry
Blackberry Service of Security and Reliability to deliver encrypted mails which were
highly appreciated by business executives are now being offered by other Smart
Phones like iPhone, HTC and Samsung.
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4. Web Usage Charges
Web Usage Charges for RIM is substantially high in India as compared to other Smart
Phones. Blackberry user have to pay Rs. 300 to 400 for web usage and Messenger
per/month whereas Samsung, I-Phone & other Smart Phone users can avail this
service for Rs.100 only.
5. Application Development
The major issue with RIM is development of its applications where Android has been
very successful. As a result the R&D department at RIM needs to introspect and come
out with breakthrough applications.
6. Third-party apps
BlackBerry smartphones also remains behind iPhones or phones supporting Android
platform when it comes to running third-party apps. Appworld of blackberry phones
is not much of a success as compared to other smartphone applications.
7. Playbook with under rated package
RIM also ruined its efforts to produce a tablet in order to compete with Apple's iPad,
Samsung’s galaxy tab etc. PlayBook received undesirable reviews because it was
launched without an email package and the popular messaging service of Research in
Motion the BlackBerry Messenger.
8. Declining Market Share
The above mentioned issues are evident from the fact that RIM market share have
declined since 2009 & its Web Usage came down by 25% since last year.
9. Huge Inventory
The most disturbing aspect of RIM's present situation is the unsold inventory of
Blackberrys and Playbooks it has sitting in warehouses somewhere around the
globe.Last year it sold its playbook on half the prices just to sell off its inventories.
According to Bloomberg, the total value of those devices is about $1 billion,with little
hope of moving the lot; RIM may take a $1 billion write-down on the value of the
dust-gathering hardware. That will have a serious impact on the company's financials.
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Chapter 3: Analysis of Issues
SWOT Analysis
Figure 4: SWOT Analysis
StrengthsOne of the most secure &
trusted Business Class Mobile-E-Mail Service.
Source Code is a techinal asset which is highly protected &
copyright protected.
Strong Reserach & Development
WeaknessesUnable to understand changin
market environment
Failing to attract Applications Developers
Lacking a vision for its future
Excess reliance over its secure messaging service as a product
selling feature
OppotunitiesExpanding Portfolio Offerings
Understanding customer requirements from successful product of other companies
and developing market ready products
Growing Telecommunications Industry in Developing & Under
Developed Countries
Threats Development of newer Instant
Messaging Application like Whatsapp
Increasing Competition from Apple & Samsung
Secure messaging now available with other mobile email clients as
well
Services like ChatOn from established player like Samsung
threatens BBM
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PEST Analysis of Research In Motion
Political
In India and some other countries, the governments have raised concerns over the security
features provided by blackberry as they cannot be monitored. In India, RIM has been asked to
share the encryption details used for Blackberry services.
Economic
The on-going global economic slowdown has had a significant impact on the sales of the
overall mobile industry. RIM shipped 7.8 million BlackBerry smartphones in the previous
quarter, only about half of the more than 14 million it shipped two quarters ago. The exports
have also gone down and hence the company is expecting to have operating loss in the
current quarter as well.
Social
Smartphones are increasingly becoming a part of the lifestyle of young adults. The level of
income, education, has improved and today’s generation is more tech-savvy. India has been
the fastest growing smartphone market in the world.
Technological
RIM has virtually been the inventor of mobile email. However, now every second
Smartphone in the country runs on an android platform. In the recent past, RIM has lost
significant market share to Apple’s iPhone, Android phones etc. Its best hope for staging a
comeback rests on the development of next-generation Blackberry 10 phones.
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Porters FIVE Forces Model: RIM Industry
Figure 5: Porters Five Forces Model
Porter 5 Forces are done to understand the Industry Attractiveness of the Smartphone
Industry
Threats of Entry- LOW
Huge Capital Requirements: High Manufacturing Cost & high R&D cost. There is a
Constant push to manufacture new and innovative products.
Economies of Scale: Fixed Cost is high so Economies of Scale has to be achieved to increase
profit margins.
Government Regulations: Telecommunications Industry is highly regulated & involves
tedious policies & procedures.
Distribution Channel: In most of the countries, smart phones are sold through mobile
operators and hence they exert more bargaining power. Alliance with mobile operators is an
essential factor for product success in smart phones segment.
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Encryption Keys: Recently Research In Motion had to divulge secret information about the
encryption keys used to decrypt messages and emails on its blackberry system. This
information was given to the Indian Government, because of government’s inability to track
messages on its servers and fear of the same being used as a communication device by
terrorists for the same reason. This also lead to setting up of a separate server for India by the
company which is different from its global strategy of routing messages through central
server, this was done due to compulsions set by Indian government.
Supplier Power - Moderate
Software Provider: There are so many open sources mobile phone operating system
providers like Android, Microsoft that options are plenty & hence the bargaining power of
Software Providers are moderate.
Hardware Provider: There are too many suppliers for hardware components (Qualcomm,
TI & Intel) and hence the bargaining power of hardware providers is also moderate.
Buyer Power: HIGH
Large choices of Smart Phones with no or very little differentiation
Elastic Demand:Demand is highly sensitive to economy. If the prices of the Mobile Phones
are increased then the buyer will shift to the other manufacturer.
Less Asymmetric Information: Buyers are aware of all the information before buying of a
Mobile Phone.
Low Switching Costs: Mobile Phones generally have low switching costs, this also depends
upon the country & mobile phone’s service provider.
Availability of Substitutes - MODERATE
Smart Phones do variety of functions, so any product that specializes in one of the functions
can be termed as Substitute. Some major substitute of Smart phones can be PDA’s,
Notebooks, I-Pad & Tablet etc. Due to intense competition new devices and technology are
being consistently launched to secure the market position. As a result consumers are left with
wider choice for Smart Phones.
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Competition - HIGH
There is an intense rivalry between the existing players like Nokia, Samsung, Apple& HTC.
There is not much differentiation in the product features of Smart phonesso manufactures
differentiate their products in terms of applications and services offered. There is also
competition on the basis of pricing of the Smart Phones as every Company wants to give
maximum features at lowest possible cost. Exit Barriers are low for manufacturers that have
shorter value chain rather than those having longer value chains. Those companies who are
involved in every aspect of Smart Phone Manufacturing finds it difficult to exit the market
rather than those companies who are involved in one or two aspect of value chain.
Industry Statistics:
IDC said that 144.9 million Smart Phones were sold worldwide in Q1 2012. Total sales in
2011 were 491.4 million units.
Gartner estimates sales of Smart Phones in the same period to be around 144.4 million.
Estimated total sales across 2011 were 472 million or 31% of Mobile Communication device
sales. This compares with figures for 2010 from the same company of 297 millions Smart
Phones or 19% of the 1.6 billion mobile phones sold that year. So year on year Smart Phones
sale rose by 58%.
Sales Prediction
• The Financial Times cites a JPMorgan prediction that 657 million Smart Phones will leave stores in 2012.
• IDC expect 2012 Smart Phones sales to reach 686 million & predict it will rise to 982 million in 2015.
• IMS research expects Smart phones to reach 1 billion in annual sales in 2016. • Morgan Stanley Research estimates sales of Smart Phones will exceed those of PC’s
in 2012.
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Smart Phones Operating System Manufacturers
International Data Corporation came out with the market share of Mobile Phones
Operating Systems for the 1st quarter of 2012.
Figure 6: Mobile Operating System Market Share Graph
Source: IDC Worldwide Mobile Phone Tracker, May 24, 2012
59%23%
6.80% 6.40%
2.30%2.20% 0.30%
Operating System Share
Android
IOS
Symbian
RIM
Linux
Windows
Others
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Market Share of Smart Phone Manufacturers
The pie chart shows the Market Share of Major Smartphone Manufacturers in the 1st quarter of 2012.
Figure 7: Smartphone Market Share Graph
Source: IDC Worldwide Mobile Phone Tracker, May 24, 2012
Financial Statement Analysis
• Year-on-year (2011-2012), Research In Motion Limited has seen revenues fall from
$19.9B to $18.4B.
• Decline in Revenues along with an increase in the cost of goods sold expense has led
to a reduction in the bottom line from $3.4B to $1.2B.
• Research In Motion Limited uses little or no debt in its capital structure and may have
less financial risk than the industry aggregate.
• Accounts Receivable is typical for the industry, with 70.61 days’ worth of sales
outstanding.
• Research In Motion Limited is among the least efficient in its industry at managing
inventories, with 25.77 days of its Cost of Goods Sold tied up in Inventories.
29.10%
24.20%8.20%
4.80%
6.70%
27%
Smartphones Market Share
Samsung
Apple
Nokia
HTC
RIM
Others
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Expenses Incomes
Figure 8: Financial Analysis
Looking at the above trend RIM has been trying desperately to increase its sales, but their
strategy of innovating new products and services has led to increase in their expenses.
Compared to 2008 their expenses have gone up 4-5 times.
Due to the fact that they are not able to sell their hardware to consumers and are not able to
increase or maintain their market share, their income levels have dipped significantly. In
2012 especially there is an operating loss in Q2.
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Figure 9: Inventory
RIM has tried to develop new operating system for their BlackBerry handsets, and they have
stocked up on the new handsets together with the older operating system handsets. This has
led to inventory pile up and the inventory has gone up two folds y-o-y. This is not a good sign
for the company since they are not able to sell their new range of products and are sitting on a
huge pile of inventory that is bringing their operating revenue down and it has a huge impact
on the income statement. Since they are not able to increase their top line together with more
level of inventory it is affecting their bottom line.
Ratio Analysis
Inventory Turnover Ratio
𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝐶𝐶𝑜𝑜 𝐺𝐺𝐶𝐶𝐶𝐶𝐺𝐺𝐶𝐶 𝑆𝑆𝐶𝐶𝑆𝑆𝐺𝐺𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝐼𝐼𝐼𝐼𝐴𝐴𝐴𝐴𝐼𝐼𝐶𝐶𝐶𝐶𝐴𝐴𝐼𝐼
Particulars 2010-2011 2011-2012
Inventory Turnover Ratio 17.34 14.39
Days Inventory Outstanding 21.04 days 25.35 days
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Debtor Turnover Ratio
𝐶𝐶𝐴𝐴𝐴𝐴𝐺𝐺𝐶𝐶𝐶𝐶 𝑆𝑆𝐴𝐴𝑆𝑆𝐴𝐴𝐶𝐶𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝐷𝐷𝐴𝐴𝐷𝐷𝐶𝐶𝐶𝐶𝐴𝐴𝐶𝐶
Particulars 2010-2011 2011-2012
Debtor Turnover Ratio 6.08 5.25
Days Sales Outstanding 60.02 days 69.46 days
Creditor Turnover Ratio
𝐶𝐶𝐴𝐴𝐴𝐴𝐺𝐺𝐶𝐶𝐶𝐶 𝑃𝑃𝑃𝑃𝐴𝐴𝑃𝑃ℎ𝐴𝐴𝐶𝐶𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝐶𝐶𝐴𝐴𝐴𝐴𝐺𝐺𝐶𝐶𝐶𝐶𝐶𝐶𝐴𝐴𝐶𝐶
Particulars 2010-2011 2011-2012
Creditor Turnover Ratio 15.31 15.02
Days Payable Outstanding 23.82 days 24.28 days
Net Operating Cycle
Net Operating Cycle = Days Inventory Outstanding + Days Sales Outstanding + Days
Payables Outstanding
Particulars 2010-2011 2011-2012
Net Operating Cycle 57.24 days 70.53 days
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Since the operating cycle for the company is increasing over the time period, it reinforces
their losing competitive advantage in the market place. It shows that it is taking more time
now to convert the raw materials into finished goods and for longer time money is stuck into
unsold inventory.
Since the closest competition of RIM is Apple, we can compare it with the operating cycle of
Apple. Its cycle time period is 44 days. This shows an enhanced advantage over RIM as it
can sell its inventory much earlier.
So, we can say that RIM needs to do much about this by bringing down the time period for
which its inventory is stuck and reducing this time period.
Also, it will help in increasing the cash flows, hence sustain in the competitive environment.
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Chapter 4: Possible Solutions
In order to survive in the future, Research in Motion has to make sure, that it leaves no stone
unturned in its future efforts because there will be no chances to turning back to improve on
mistakes and it would also be a do-or-die situation for the companies top management.
We believe there are possible two solutions available to the organization:
Alternative 1
Since the organization has invested more than it’s worth in the research & development
efforts to develop a new range of software operating system for their products, they continue
with their efforts.
Create an all out marketing effort to bring people back to Blackberry.
Hope that the effort pays out for the company.
Pros of continuing with current efforts
• It could result in one of the biggest effort by which an organization is able to reclaim
its brand.
• There is a kind of products that consumers now prefer, and understanding this,
blackberry can create products that strike balance with its enterprise users and other
users.
Cons of continuing with current efforts
• Any failure to deliver from this point for the organization would lead to an
unavoidable failure at organization and almost certainly lead to closure of
organization/ bankruptcy.
Alternative 2
If the organization does not have confidence over the success of product or service that are
being developed and believes that there are chances of an unwanted failure of the newly
developed products of the company which will very certainly lead to an unforeseen tumble to
the organization stock value and may even end up in bankruptcy of Research in Motion. In
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this case company should already take stock of the situation and take advantage of current
value of company.
• It can sale the stocks while they still can redeem considerable value.
• Generate funds by selling fixed assets and properties.
• Sell intellectual property i.e. Blackberry services which were the reasons of the rise of
blackberry brand as it provides the most secure email and messaging platform.
Alternative 3
Consider selling handset business, Research in Motion can think of selling its handset
business to focus on providing blackberry enterprise services across all platforms and create a
core competency of providing secure email and messenger (chat) services to its client. In this
situation it will be able to focus on providing benefits to its customers without making
extensive inroads and investments in hardware category to manufacture phones.
• This is an essentially important alternative that RIM may look towards considering
there have been various organizations which have been trying to capture its handset
business.
• There have been constant speculations on Samsung wanting to buy Blackberry
business. IBM might have made an informal bid for RIM’s enterprise business. Also
split of Research In Motion will result in sell out of organization to companies like
Facebook & Amazon who are waiting to strike it big in telecom industry.
Recommendations
• The prime reason that customers are still buying Blackberry handsets is because of
value and privilege they provide. A blackberry handset has a very good build quality,
better than most of competitive brands and provides niche messenger & email
services which are secure than usual email applications. Thus RIM should concentrate
on keeping these benefits for future products.
• RIM should also focus on providing extensive services and benefits to markets in
which it is getting most benefit. In North American market blackberry sales seems to
be negligible while they still are considerable in Europe and Asia. Thus, blackberry is
Page | 23
focusing on launching Blackberry 10 products first in Europe and Asia, build brand
resonance of new technology and then launch in American markets.
• One of the main reasons that Research in Motion is lagging behind with its blackberry
range of smartphones is because of third party applications provided by the
competitors. To overcome this RIM must make sure that appropriate changes are
made to its scarce and bleak App World so as to increase number of applications
available and richness of these applications on blackberry products.
• RIM needs to improve on its operating systems on which its blackberry smart phones
and tablets operate; the company can provide its playbook with android operating
system just to stay in the game
Page | I
References • RIM’s Blackberry Delay Hits Stock, June 28, 2012
http://online.wsj.com/article/SB10001424052702304058404577495013601177508.ht
ml#
• RIM Official Website http://www.rim.com/newsroom/mediaexecutive/index.shtml
• Research In Motion Annual Reports FY 2009 thru 2012
• Leaked RIM roadmap shows the future of BlackBerry
http://tech2.in.com/news/blackberry/leaked-rim-roadmap-shows-the-future-of-
blackberry/321872
• John A Pearce, Richachard B Robinson, AmitaMital, “Strategic Management”, 12th
edition, 2012.
• Blackwell, “Introduction to Strategic Management”, 2007.
• Glass, N. M.,“Pro-active management: How to improve your management
performance”, 1991
• Johnson, G., Scholes, K., &Sexty, R. W., “Exploring strategic management”.,
Prentice Hall, 1989
• RadhaBalamuralikrishna, JohnDugger, “SWOT analysis: a management tool for
initiating new programs in vocational schools, Journal of Vocational and Technical
Education”, Volume 12, Number 1, pg 23-31.
• Jim Downey and Technical Information Service ,“Strategic Analysis Tools”, 2007.
• <http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_analy
sis_tools_nov07.pdf.pdf>
• Prof. Tony Lima, “Michael Porter’s “Five Forces” Model”, 2006
• <http://arfuso.weebly.com/uploads/9/9/6/1/996130/porters_5_forces_model.pdf>
• IBM made "informal approach" for RIM'S enterprise business - report
http://tech2.in.com/news/general/ibm-made-informal-approach-for-rims-enterprise-
business-report/362292
• Why Samsung Should Buy Blackberry
http://www.afr.com/p/technology/digitallife/why_samsung_should_buy_blackberry_n
GQM0VhUFlPB2KGS4tQL9
Page | I
Exhibits
Exhibit 1: Balance Sheet
Exhibit 1: Balance Sheet
Currency in
Feb-28 Feb-27 Feb-26 Mar-03
Millions of US
2009 2010 2011 2012
835.5 1,551.00 1,791.00 1,527.00
682.7 361 330 247
1,518.20 1,912.00 2,121.00 1,774.00
2,112.10 2,594.00 3,955.00 3,062.00
157.7 206 324 631
2,269.80 2,800.00 4,279.00 3,693.00
682.4 660 618 1,027.00
183.9 194 229 197
187.3 247 241 365
4,841.60 5,813.00 7,488.00 7,056.00
1,923.10 2,878.00 3,899.00 4,780.00
-588.4 -921 -1,395.00 -2,032.00
1,334.60 1,957.00 2,504.00 2,748.00
137.6 151 508 304
720.6 958 577 337
0.4 -- -- --
1,066.50 1,326.00 1,798.00 3,286.00
8,101.40 10,205.00 12,875.00 13,731.00
Accounts Receivable
As of:
Assets
Cash And Equivalents
Short-Term Investments
TOTAL CASH AND SHORT TERM INVESTMENTS
Deferred Tax Assets, Long Term
Other Receivables
TOTAL RECEIVABLES
Inventory
Deferred Tax Assets, Current
Other Current Assets
TOTAL CURRENT ASSETS
Gross Property Plant And EquipmentAccumulated Depreciation
NET PROPERTY PLANT AND EQUIPMENT
Goodw ill
Long-Term Investments
Other Intangibles
TOTAL ASSETS
Page | II
448.3 615 832 744
1,238.60 1,260.00 1,936.00 1,695.00
361.5 96 179 --
-- 378 575 687
53.8 68 108 263
2,115.40 2,432.00 3,630.00 3,389.00
87.9 141 276 232
24 29 31 10
2,227.20 2,602.00 3,937.00 3,631.00
2,208.20 2,372.00 2,359.00 2,446.00
119.7 -- -- --
3,545.70 5,274.00 6,749.00 7,913.00
-- -94 -160 -299
0.5 51 -10 40
5,874.10 7,603.00 8,938.00 10,100.00
5,874.10 7,603.00 8,938.00 10,100.00
8,101.40 10,205.00 12,875.00 13,731.00
Other Non-Current Liabilities
LIABILITIES & EQUITY
Accounts Payable
Accrued Expenses
Current Income Taxes PayableOther Current Liabilities, TotalUnearned Revenue, Current
TOTAL CURRENT LIABILITIES
Deferred Tax Liability Non-Current
TOTAL COMMON EQUITY
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
TOTAL LIABILITIES
Common Stock
Additional Paid In Capital
Retained Earnings
Treasury Stock
Comprehensive Income And Other
Page | III
Exhibit 2: Profit & Loss Statements
Exhibit 2: Profit & Loss Statements
Currency in
Feb-28 Feb-27 Feb-26 Mar-03
Millions of US Dollars
2009 2010 2011 2012
11,065.00 14,953.00 19,907.00 18,435.00
11,065.00 14,953.00 19,907.00 18,435.00
5,968.00 8,369.00 11,082.00 11,842.00
5,097.00 6,584.00 8,825.00 6,593.00
1,495.00 1,820.00 2,400.00 2,516.00
685 965 1,351.00 1,536.00
195 310 438 571
2,375.00 3,095.00 4,189.00 4,623.00
2,722.00 3,489.00 4,636.00 1,970.00
79 28 8 21
79 28 8 21
2,801.00 3,517.00 4,644.00 1,991.00
-- -- -- -125
-- 9 -- -355
-- -260 -- --
-- -164 -- --
-- -96 -- --
2,801.00 3,266.00 4,644.00 1,511.00
908 809 1,233.00 347
1,893.00 2,457.00 3,411.00 1,164.00
1,893.00 2,457.00 3,411.00 1,164.00
1,893.00 2,457.00 3,411.00 1,164.00
1,893.00 2,457.00 3,411.00 1,164.00
NET INTEREST EXPENSE
As of:
Revenues
TOTAL REVENUES
Cost Of Goods Sold
GROSS PROFITSelling General & Admin Expenses, TotalR&D Expenses
Depreciation & Amortization, Total
OTHER OPERATING EXPENSES, TOTALOPERATING INCOME
Interest And Investment Income
NET INCOME TO COMMON EXCLUDING EXTRA ITEMS
EBT, EXCLUDING UNUSUAL ITEMS
Merger & Restructuring ChargesImpairment Of Goodw ill
Other Unusual Items, TotalLegal Settlements
Other Unusual Items
EBT, INCLUDING UNUSUAL ITEMS
Income Tax Expense
Earnings From Continuing Operations
NET INCOMENET INCOME TO COMMON INCLUDING EXTRA ITEMS
Page | IV
Exhibit 3: Cash Flow Statement
Exhibit 3: Cash Flow Statement
Currency in
Feb-28 Feb-27 Feb-26 Mar-03
Millions of US Dollars
2009 2010 2011 2012
1,893.00 2,457.00 3,411.00 1,164.00
203 345 497 660
125 271 430 863
328 616 927 1,523.00
-- -- -- 355
-937 -481 -1,352.00 898
-296 48 42 -409
177 167 216 -90
17 14 40 151
-114 -266 82 -314
384 357 476 -446
1,452.00 3,035.00 4,009.00 2,912.00
-834 -1,009.00 -1,039.00 -902
-48 -143 -494 -226
-688 -421 -557 -2,217.00
-253 103 392 321
-1,823.00 -1,470.00 -1,698.00 -3,024.00
-14 -6 -- --
-14 -6 -- --
27 30 67 9
-- -869 -2,153.00 -156
12 2 -1 -2
25 -843 -2,087.00 -149
-3 -6 16 -3
-349 716 240 -264
Asset Writedow n & Restructuring Costs
As of:
NET INCOMEDepreciation & AmortizationAmortization Of Goodw ill And Intangible
DEPRECIATION & AMORTIZATION, TOTAL
CASH FROM INVESTING
Change In Accounts ReceivableChange In Inventories
Change In Accounts PayableChange In Unearned RevenuesChange In Income TaxesChange In Other Working Capital
CASH FROM OPERATIONS
Capital Expenditure
Cash Acquisitions
Sale (Purchase) Of Intangible AssetsInvestments In Marketable & Equity Securities
Foreign Exchange Rate AdjustmentsNET CHANGE IN CASH
Long Term Debt Repaid
TOTAL DEBT REPAIDIssuance Of Common StockRepurchase Of Common StockOther Financing Activities
CASH FROM FINANCING
Page | V
Exhibit 4: Ratio Calculation
Column1 2011 2012
Inventory Turnover Ratio 17.34272 14.39757
No. of Days in Inventory 21.04629 25.3515 Debtor Turnover Ratio 6.08033 5.254382
No. of Days 60.02964 69.46583
Creditor Turnover ratio 15.31721 15.02792 No. of Days 23.82941 24.28813
Exhibit 4: Ratio Calculation
