Question 1 With reference to the case study, it is noted that various countries were involved in the Blackberry controversy. Frustration arose for countries like India, Saudi Arabia, United Arab Emirates (UAE) and Indonesia as the government considered the phone and system to be a national security threat due to strong encryption of the Blackberry system that guaranteed customers privacy. Local governments had difficulty to intercept or monitor conversations (regarding illegal or terrorists activities), as the information did not pass through domestic servers.

The case study points out that the UAE had intentions to ban Blackberry in 2010 following arrests of several youths that organized a peaceful protest using Blackberry Messenger. It was believed that the attackers of Mahmoud al-Mabhouh, senior leader of Hamas (Palestinian militant group), in Dubai, is allegedly a team of Israeli intelligence agency in 2010 communicated securely on their Blackberry phones. The regulators in UAE argued that some features operated by Blackberry fell outside the country’s laws, therefore causing judicial, social and national security concerns. This overshadowed the initial considerations of the freedom protection of the population. Saudi Arabia intentions to ban the Blackberry arose as government claimed that the Blackberry services did not meet the regulatory requirements and posed a national security threat. The country, which is RIM’s biggest Middle East market, also believed that the Blackberry is influencing the youths negatively, challenging the moral and culture values.

Other Middle East countries involved in the Blackberry controversy are Lebanon, Bahrain and Kuwait; of which concerns are also on national security. Lebanon’s Telecommunication Regulatory Authority (TRA) was worried over the integrity of the telecom network after the arrest of three people suspected of spying for Israel. Moral and security was Kuwait’s main concern, with the country’s specific request to RIM to block access to pornographic sites as pornography is considered a crime in most of the Middle East governments. Security was also the cause concern in Bahrain and Algeria over the Blackberry.

Blackberry also faced challenges in India particularly after terrorists attacked in Mumbai occurred, whereby five Blackberry phones were recovered from the crime scene creating suspicion that the terrorists would have coordinated the entire attack on Blackberry phones. Indonesia also expressed its fears on Blackberry usage for security and moral reason; particularly on pornographic contents as pornography is illegal in Indonesia.

Understanding from the case study, Blackberry faced highest level of controversy from Middle East and Asian countries. In a general perspective, national security was the utmost concern for these governments; followed by moral and cultural concerns. Understanding these countries further and why these countries had challenged the Blackberry greatly boils down to understanding the culture and beliefs in the countries. Though these countries (Middle East and Asia) are going rapid development in addition to having the high density of population; these countries still strongly holds on to traditional beliefs and cultures mostly based on religion orthodox. Contrary to the Western cultures, Middle East and Asian countries are generally more conservative lot. Freedom of rights and privacy is questionable in this part of the world.

Question 2

Blackberry smartphones were sold strictly to the business entities and government agencies in the United Kingdom (UK), United States (US) and Canada initially. Later on, Blackberry decided to enter foreign markets. In 2002, RIM made net losses amounting to $28.3m as a result of the mounting costs of product development and international expansion. The company therefore made the decision to cut 10% of its staff. By 2004, the company was back on course, and there were now 1.7 million Blackberry subscribers worldwide. However, with 82% of these still based in North America, the company took steps to ramp up its international expansion plans. (Lestor, 2013). The case study pointed that RIM faced saturated markets in North America and UK, in additional to increasing competition from other makes such as Palm & Nokia, later on Android and Apple systems.

There are a number of ways in which expanding globally or entering into foreign markets can enable companies to increase their profitability and grow their profits more rapidly. At the most basic level, global expansion increases the size of the market of a company is addressing, thereby boosting profit growth. Moreover, global expansion offers opportunities for reducing the cost structure of the enterprise, or adding value through differentiation, thereby potentially boosting profitability. First, by spreading the fixed costs associated with developing a product and setting up production facilities over its global sales volume, a company can lower its average unit costs. Second, by serving a global market, a company can potentially utilize its production facilities more intensively, which leads to higher productivity, lower costs and greater profitability. Third, as global sales increase the size of the enterprise, so its bargaining power with suppliers increases, which may allow it go bargain down the cost of key inputs and boost profitability that way? (Hills & Jones, 2011)

RIM had realized the vast potential in global markets. As noted in the case study, India was a very lucrative market and on September 1, 2010, Informa Telecoms & Media forecasted that Blackberry sales in India would be more than 600,000 by end of 2010 and that India’s smartphone market would have approximately 12 million by then, a figure expected to reach 40 million by end of 2015. The contribution of the global market businesses is notable in case study exhibits III whereby “Other Countries” revenue distribution consistently contributed for more than 20% of RIM’s total revenue distribution through 2006 to 2010.

In summary, RIM had no choice but to enter foreign markets to tap into larger markets increasing profitability opportunity as well as to stay ahead of competitors.

Question 3 When you have a competitive advantage, your products and services can be provided in ways that deliver more sales, higher profitability and greater cash flow than would occur if a competitor supplied the same customer. (Mitchel & Coles, 2003)

To succeed, the first step is to position or ‘situate’ the target consumer’s mind in such a way, that his or her perception of the brand, it is distinctive and offers a persuasive customer value better than its competitors. This is called competitive advantage. (Ries & Trout, 2001)

Based on the case study, Blackberry’s top competitive advantage in the industry over its competitor’s was its strong security system over rivals (Apple, Goggle, Nokia). Information and data transacted through the RIM system and device is directly sent to server in Canada of which local government was unable to intercept. Neither RIM nor 3rd party can access the corporate data on the encrypted BES network. This was the best selling point in many countries and attracted many corporations to utilize the device and system largely. It also attracted elite users such has Barrack Obama and prominent corporate figures across the globe. This indirectly was a strong marketing and promotion tool for RIM.

The Blackberry was evolving from a device focused largely on enterprise email and design to be a secure and easy-to-use tool toward a multimedia handheld. Deployed by tens of thousands of organizations around the world, Blackberry has evolved into a global wireless data platform that supports a wide range of application on a variety of proprietary and third-party device. Blackberry smartphone stays true to the original spirit of security, simplicity and value, but they now connected both enterprise customers and consumers to a much wider world of communications, information and entertainment. (Grandori & Giordani, 2011).

RIM’s genius was to work well with Windows, but to use its own operating system which could be optimized for small devices and therefore worked far faster than Microsoft’s equivalent. In addition to this Blackberry did two other things which were unconventional but worked brilliantly. The first was to offer a “QWERTY” keyboard that was large enough to be easy to use. The second was to use a ‘flywheel’ to move between emails and around screen. This worked extremely fast, and people learned how to use it in literally a few seconds. Within minutes of having their Blackberry set up, people were comfortable using tem, unlike most other competitive devices trying to do the same thing. (Lester 2013)

In summary, the key features that enabled Blackberry to gain competitive advantage in the world market are that the Blackberry / RIM had a team which took risks into creating and innovating system and device that was completely different from competitors. It has invested heavily on R&D, to derive to a product that served its users well. It had also maintained its stance of its security system despite facing various challenges faced globally. RIM’s strategy to heavily target on government bodies and corporations had placed it way ahead of its competitors. This is one crucial factor that RIM had successfully stayed ahead in the industry.

Question 4

Strategic competitive advantage is often short lived. Competitors would soon close their competitive gaps with Blackberry. Blackberry needs to critically assess the current and future threats that it will face.

Blackberry holds various advantages which sets it ahead of its competitors. Blackberry is one of the pioneers in the industry with a great deal of experience compared to its competitors. It has invested heavily on R&D which brought upon on of the most outstanding systems and devices that the world has seen. It has been a distinctive brand which had gained confidence in the government bodies and large corporations; monopolizing this segment in one point of time. These advantages have put Blackberry ahead of its competitors. Blackberry needs to capitalize on these advantages; move further to secure its positioning in the market. A very important factor that Blackberry should look into is the trend that the market is moving on to. Blackberry devices are portrayed as sleek and sophisticated, attracting consumers in the executive and corporate levels. The younger generation markets which preference are for fun and trendy devices is a vast market. Blackberry should consider introducing various products to cater for different level of consumer portfolios. This enables penetration in to various segments of the market which competitors are in. This strategy would also include marketing and promotion, not only targeted to business executives and corporates, but also to reach out to broader span of consumers.

Analyzing its competitors is crucial; through identifying advantage that competitors have which it does not. Suggestions to handle this threat would be either to innovate or incorporate its competitors’ advantages (be it of a system or device) into Blackberry’s own system or device. This could be the device designs or system software that attracts buyers. Blackberry should consider joint venture or buy ups of other competitors. This would be beneficial to both Blackberry and the acquired company to enable broader market penetration, larger prospective developments for both companies and reduces level of industry competition threats.

Blackberry should look into target marketing based on countries. Countries such as India, China, Indonesia and Russia are gold mines for the industry due to its country’s vast population. Joint venture and partnerships with local companies are crucial to secure entrants to the market. Introduction of devices and systems that fits the needs and also regulation of the country is important for the product to take of in the particular targeted country.

References

Mitchell, D. & Coles, C. (2003), The Ultimate Competitive Advantage: Secrets of Continually Developing a More Profitable Business Model, Berreett-Koehler Publishers

Rise, A. & Trout, J. (2001), Positioning: The Battle for Your Mind, McGrawHill Professional

Lester, D. (2013), Global Brands that Changed the World, Jaico Publishing House

Hill, C. & Jones G. (2011) Essentials of Strategic Management, Cengage Learning

Grandori, A. & Giordani L.G. (2011) Organizing Entrepreneurship, Routledge