In RIM’s earlier days they also were leaders in the development of wireless point of sale (POS) systems, wireless modems, software, and firmware for radios and computers. RIM was a steadily growing company until 2005, when the company took amazing strides in launching carriers around the globe and creating strategic partnerships with several major companies (BlackBerry, 2006, p. 10). From 2005 to 2008, RIM grew from 1. 3 billion in revenues to over 6 billion, and grew from 3 billion to 6 billion in 2007 alone. RIM’s explosive growth was a result of their famous product line BlackBerry.
BlackBerry was one of the first corporate phones that integrated a secure process for checking and sending emails. “Document Push is said to be a unique feature not found in any other document management solution on the market” (Document, 2005, p. 11). BlackBerry dominated in business and military sales of phones, and then became competitive in 2007 with consumers as well. Summary of Culture The most essential characteristic of RIM’s culture is their ability to innovate and work in an environment that allows for creativity to cultivate.
The location of headquarters in Waterloo, Ontario, Canada has been a major focal point of RIM culture since the start of the company. RIM is comprised of a wide arrange of employees by age which allows them to remain cutting edge and knowledgeable of the wireless industry. RIM’s culture can be seen as a direct link to their low employee turnover rates and high employee satisfaction. SWOT Analysis of RIM Strengths RIM has numerous strengths that have helped them to create a competitive advantage.
RIM’s main strength is their ability to innovate. RIM has been a leading innovator in wireless products since the late 80’s, and continues to grow R&D alongside sales. RIM has the advantage of being located in Waterloo, Canada where the local talent pool for engineers and computer science graduates is abundant because of the University of Waterloo. Due to innovation, most of their strengths have been derived from a combination of patents, copyrights, and contractual agreements that all surround their cryptographic and software source code.
The cryptographic and software source code allowed RIM to obtain a first mover advantage in B2B sales of mobile devices to businesses and military by integrating email into their mobile phones. This also allowed them to obtain significant brand recognition for creating a secure voice and data transmission solution. Once RIM was established in the business and military segments, it began to make head way in consumer markets with their new products, BlackBerry Pearl and BlackBerry Curve.
RIM’s copyrights also gave them an advantage of creating strategic alliances and partnerships with major companies such as Sony Ericsson, Nokia, Yahoo, and HTC (BlackBerry, 2006, p. 11). Weaknesses Some of the very strengths of RIM can also be seen as some of their greatest weaknesses. RIM holds an internal pride for locating the heart of its R&D in Waterloo. While this has been a great source of talent and company culture, it has also put a clamp on their opportunity for growth geographically and for expansion into other market segments.
RIM’s employees are only so focused on maintaining control of R&D in Waterloo they reject any change in location; therefore stunting their growth overall. RIM’s primary reason behind keeping R&D centered in Waterloo is for the sake of their patents, copyrights, and contractual agreements, and so they are held captive by the very thing that makes them strong. Also, due to the notion of keeping R&D located at Waterloo, RIM is having difficulty finding new talent in the already bogged down area of Waterloo.
RIM did try to implement an online application process, but is unable to utilize it properly. Applicants are only able to apply to one job; creating a loss in potential employees. RIM engineers and computer scientists are becoming overworked due to the lack of employees. Not only is the stress running high from pressures to maintain innovations level of innovation held by their competitor, but space has also become an issue. RIM’s offices have become overcrowded and unmanageable, and are quickly losing efficiency. Opportunities
Most of RIM’s opportunities lie where their weaknesses are great. RIM has been neglecting their opportunity to expand their core R&D outside of Waterloo. By expanding outside of Waterloo, RIM will be able to expand R&D without overcrowding their current facilities. They will also be able to compete more effectively worldwide. While RIM shipped 42% of mobile devices in North America in 2007, they only shipped 12% of the market worldwide. Opportunities for expansion in subscribers is limited in North America seeing as the market has a penetration rate of 87%.
However, outside of North America are much larger opportunities, such as China, India, and other developing countries. In 2007, China’s market was growing at 18. 3% per year with only a penetration of 39%, and India’s market was growing 60% per year and only 21% penetration (White, & Beamish, 2008, p. 75). By expanding R&D globally they will not only open doors to new markets, but also new talent. Threats RIM’s major threat is competition such as Apple, Microsoft, and Google in the North American market.
These competitors are starting to increase their mobile phones capabilities so that they can compete more effectively in the B2B segments that RIM once dominated. Apple recently announced that they would be incorporating the ActiveSync direct Push, into their iPhones in order to capture the business professionals. Competitors are not only are making their phones better for the business professional, but also integrating more products into the mobile device for consumers. For instance, Apple introduced the iPhone which has greater breadth in technology, and has set a new standard for usability.
Zeichick reports “since the release of the iPhone 3G on July 11, Apple holds the market for high-speed consumer-friendly smartphones entirely to itself” (2008, p. 6). Another threat competition possess is their ability to attract, hire and develop their R&D facilities more resourcefully than RIM. Competitors have implemented hiring strategies that are far more efficient than RIM’s “ear to the ground” policy (White, & Beamish, 2008, p. 80). All of RIM’s major global competitors such as Microsoft, Motorola, and Apple all are spending far greater amounts on R&D, and have an advantage over them in innovation.
Competitors are expanding globally at a much higher rate than RIM, and are in better positioning for market share outside of North America; where RIM is still greatly lacking. Prevalent Issues and Solutions Provided by the Case RIM prides themselves on their ability to compete by means of innovation, and thus they have always tried to maintain a high level of R&D within the firm. RIM bases their R&D levels as a percent of sales, targeting around 10-12% of revenue to be spent on R&D.
They have managed to keep these levels by growing organically until 2005 when sales began to increase by over a billion dollars a year. According to their annual report from December 31, 2007, RIM’s R&D was projected to increase by $100 million from the previous year; however as a percentage of sales they projected to drop to 5. 99% down from 7. 77% the previous year (White, & Beamish, 2008, p. 77). RIM, who was once a leader in innovation, was starting to fall behind in the competitive field of mobile phones. RIM needs to take measures immediately to ensure proper R&D levels.
As competition heats up in the smart phone market, the competition in acquiring new talent is as well; only making the task of acquiring new talent extremely difficult. RIM management is considering the following four options for growing R&D: do what we do now at greater levels, expand existing geographies, increase acquisitions, and go global. Do What We Do Now At Greater Levels Currently RIM’s approach to finding new talent for R&D is based on networking through personal and professionals relationships alongside their co-op program they hold with the University of Waterloo.
The co-op program currently brings on 300 grad students each semester to work alongside the engineers and computer science professionals as interns, and then RIM extends job offerings to qualified candidates. RIM can improve their co-op program by offering it to multiple universities rather than only to Waterloo. Over the last 7 years RIM has created R&D facilities located in Ottawa, Mississauga, Dallas, Chicago, Atlanta, Seattle, Palo Alto, and England. All of these facilities could potentially implement a co-op program with nearby universities, or summer internship programs to increase recruitment of talented young grad students.
RIM is also considering adding benefits to these programs like competitor Microsoft offers. Benefits such as housing, transportation, and paid travel could entice individuals to choose RIM as their intern destination over opponents. RIM has also taken recruitment and job advertisements to the internet; however there is great room for improvement. RIM’s online application process only allows an individual to apply for one job at a time, and sufferers a great deal of qualified candidates due to the systematic flaw.
Companies, such as Apple, Motorola, and Sony Ericsson, have a more advanced system that allows applicants to create an online profile that can be stored and applied to several jobs. If RIM changes their current model to mimic some of its competitors they are likely to obtain more suitable applicants for each position, and be able to reach a more global talent pool. Another option for hiring new grad students is to implement a semi-yearly or yearly hiring wave rather than posting individual jobs. Several other major corporations have these systems in place, including competitor Symbian.
Companies that are growing continually implement this strategy so that they can maintain levels of efficiency. Typically, companies will receive online applications year round, and once or twice a year they will sift through the resumes selecting the best applicants. The chosen applicants then will participate in multiple events to see if they will be a good fit with a company. This process normally includes several interviews, testing, group assignments, and case studies. Once passing the recruitment day, candidates will go through an onboarding process to help adapt them to company policy and culture.
Then they are assigned as needed to different sections of the company. Grow and Expand Existing Geographies RIM started to expand product development centers outside Waterloo in 2000 opening several locations, as previously mentioned, in the United States, two more locations in Canada, and one in England. RIM could continue to push forth with this initiation of expanding within the North American region, and also expanding the scope of the locations already existing. Before a new location can be chosen it must first pass a set of stringent equirements that RIM has emplaced. The requirements for potential areas are they must already have an abundant amount of software developers with experience, the cost of living and salary for employees is reasonable, and be near universities to promote their co-op program. RIM is unlike their competition in this sense, because most competitors still rely on one major campus for all R&D. Apple, Google, and Microsoft have only expanded with minor locations aboard keeping the core R&D at their home facilities. Increase Acquisitions
Increase by means of acquisitions is by no means a new concept to RIM, or any other software firm. In the software and mobile phone industry acquiring smaller companies has become one of the fastest ways to not only gain an experienced set of talent, but also intellectual property and location. RIM acquired high-tech startup out of Israel, for their intellectual capabilities of the display and input of Chinese characters. This acquisition allowed them to become more suitable for the Chinese market, and provided Waterloo with 11 more highly qualified engineers.
Another factor for RIM to consider is the economic down turn in the United States, and the abundant amount of small firms struggling to survive the recession. RIM could purchase these firms for reasonable cost; gaining experienced talent and intellectual properties. Increased acquisitions also can allow a company to penetrate certain areas that could otherwise be hard or impossible to gain access to. For instance, Google acquired a small wireless software company in Waterloo simply for the talent, recognizing Waterloo was a place with a great talent pool.
RIM could use acquisitions to gain access to several countries, which they do not yet compete effectively in. In some countries consumers prefer to buy and do business with companies from their own countries rather than foreigners. Europe is a prime example, in which RIM could acquire a business and gain access to their market. Go Global Another way for RIM to increase R&D is to go global. While, RIM has expanded into different countries with R&D, the core of their product development still remains at Waterloo.
The different areas that RIM has expanded their R&D too, are areas where laws have been put in place and are protected for patent and intellectual rights. RIM has taken measures to expand other functions of the business to globally that do not directly relate to their source code; such as customer service in Singapore, and sales and marketing staff in France, Germany, Italy, Spain, China, Australia, Hong Kong, and Japan. Going global has been attempted by most of the software/mobile phone industry.
Some have been able to achieve great things, but the cost of businesses can sometimes be seen as too much. Nokia, for example has expanded R&D to China, and was able to gain significant market share in the region. However, in China “the rate of infringement of intellectual property rights (IPR) in China is among the highest in the world” (Pangattaro, 2007, p. 632). The constant threat of employees walking out the door with strategic information, and taking it to competitors is very high due to insufficient IP protection laws and regulation.
Despite Nokia’s effort to develop a relationship with China, through joint research programs with Tsinghua University had to file suit against two Beijing firms for ripping off their mobile phones. However, recent studies show that “ R&D units that have developed adequate measures to manage their Chinese R&D staff have succeeded in making Chinese employees loyal to the R&D unit”(Marcus, & Gassmann ,2011, p. 73). Analysis of Options and Recommendation Analysis of Do What We Do Now At Greater Levels
RIM is projecting they will need to hire over 1,400 new software developers to reinstate the status quo for R&D. One option RIM is considering is to continue their current hiring strategies, but at a higher level. Currently, they hire by personal and business networking, through co-op programs with the school, and more recently went to the web with job postings. . It will be quite a difficult task to complete with only increasing their current model. RIM’s method of personal and business relationships to find new employees will no longer be able to produce a substantial amount.
RIM has saturated the market in Waterloo, and finding new employees has become extremely difficult. Also, competition has moved into the area making it harder and more costly to find to obtain the best talent. It is unlikely they will be able to find a great deal of experienced help within the area. As previously mentioned, RIM would extend their co-op programs to other universities in hope to allocate more talent. Unfortunately, the co-op program will only bring in inexperienced help, and would cost RIM time and money to develop the new employees.
Another option regarding new grads is to hire in waves, yearly or biyearly, to help with continuing growth. While this is a great strategy for growing companies to maintain their pipeline, it will not provide RIM with the help it currently needs to dig them out of the hole in terms of R&D. RIM will need most of their new hires to have an experienced skill set so that they can be implemented instantly, and relieve the staff in Waterloo. Analysis of Grow and Expand Existing Geographies RIM has been extremely careful when expanding R&D to new areas, only setting up shop where their source code can be protected.
One option for RIM is to continue with the process of selecting new cities and countries where IP laws are in full force, and gain a pool of talent from these areas. RIM can also focus on escalating the R&D centers already implemented to take more of a central role in R&D instead of keeping the core at Waterloo. A factor to consider is the cost of hiring and the standard of living in other areas. RIM follows a set of rules for choosing where to establish an R&D center, which is not uncommon for competition as well. This leads to RIM in competitive locations making it harder to gain a talent pool at a reasonable price.
For instance, the employees in Palo Alto require a much higher pay scale than Waterloo because of competition, and turnover rates are high. One adverse effect that can take place when expanding abroad is loss of company culture. RIM has a very strong culture, which they believe to be a product of environment of their Waterloo office. RIM would have to approach each new R&D office with an abundant amount of training to ensure a shared understanding of company values, and culture. Analysis of Increase Acquisitions One route RIM could take to reach R&D levels is to increase acquisitions.
RIM has already been successful with this strategy, and it would be a strategy that would allow them to hire multiple engineers and software designers at once. Not only would RIM gain an experienced talent pool, but also intellectual property rights, and new locations. Acquisitions have a few setbacks though that must be considered. By acquiring different firms RIM would be able to obtain an experienced set of talent, which is essential at this point. However, acquisitions must be preceded with caution because employees of the acquired firm can sometimes react unfavorably to such situations.
Another concern is whether acquired employees would be able to adapt to company policy, culture, and values of RIM. “Culture matters – it can make or break a merger” (Growth, 1996, p. 29), and so RIM must be particularly careful to only acquire firms that are a perfect fit for the company to avoid major losses. Gantumur and Stephan state “the post-merger innovation performance, in turn, is driven by both the prior success of in-house R&D commitment and the deterioration of internal technological capabilities at acquiring firms” (2012, p. 77). Acquisitions are also very costly and can waste time and money. In the past when RIM acquired a firm for talent and intellectual property they would send the new employees to Waterloo, striping what was left of the firm. This can be a very costly approach to finding new employees because they take on a great deal of debt to purchase the firm. It can take a profuse amount of time to liquidate a firm to receive funds expended back, and sometimes the process of liquating can strip away the value resulting in further losses.
Analysis of Go Global RIM was well aware that over half of the new employees they would hire to reach R&D levels would have to come outside of Canada due to lack of potential candidate and space in Canada. The question RIM was pondering is how far away from Canada should they go when considering their source code they must protect. While, RIM has already expanded some product development to the US and England, it had also expanded functions other than R&D to other countries outside of the North American region.
RIM fears of R&D in developing countries are justified, but there still remain untapped markets in these regions that could be beneficial for long term growth. RIM must start to consider possibilities outside of their source code if they wish to continue to be competitive and enter into new markets. RIM could use acquisitions as more than just a tool for hiring, but also as a means to enter new markets that are otherwise hard to reach. Europe is a prime example of where acquisition could allow them to gain an excellent talent pool, but also access to the European markets where consumers are highly nationalistic.
RIM could also enter China and India by the same channels; which have exceptionally enormous markets that would allow them to grow immensely. China presents “an impasse with regard to RIM’s use of encryption technology and the Chinese authorities’ desire to monitor e-mail traffic and content” (Ensign, et al. , 2008, p. 129). However, things are starting to shift overseas “both China and India have been experiencing a historical take-off in the use of intellectual property rights (IPR)” (Godinho, & Ferreira, 2012, p. 99). If RIM should find it too risky they could chose not to disclose or use their source code or cryptographic software to R&D facilities in areas of wariness, but use those R&D facilities to explore other technologies that obtain to less confidential information. RIM also could become either a multinational or transnational company by focusing on developing products for the each market; seeing as the needs in those countries are different from the North American region. Recommendations
RIM has a daunting task of hiring 1,400 new employees this year, and not one option alone will adequately give them the right mix of new employees. In order for RIM to grow to the size of competitors it must start taking actions from all angles. According to the McNielly, it is important to become an industry leader because a “powerful position allows them to set the industry’s standards and define the playing field” (2012, p. 13). RIM can employ a few tactics to hit the ground running; however most of their growth will take time to take effect.
The first step RIM should take, seeing as they are a software company, is to develop a better website and job application process. This will allow them hire experienced help globally in a rather quick fashion. The second step is to begin executing co-op programs with the technological university surrounding all of their facilities to guarantee there are gaining the best and brightest young talent. By expanding the co-op program to all of the facilities it will help to expand the non-Waterloo facilities as well.
Moving forward Waterloo should transfer some of their activities to other development centers and allow them to grow more. This will allow Waterloo to focus more on big picture task, and be less bogged down with minor details. They should also start hiring in waves for grad student positions; which that will allow them to be able to grow continually as a flow rather than constantly trying to play catch up when they are shorthanded. As for long term goals, RIM should transform their company from a global model to a transnational model.