Elements of Business: Research in Motion
Research in Motion (RIM) is a telecommunications organization founded in Waterloo, Canada in 1984 by Mike Lazaridis and Doug Fregin. RIM designs, manufactures, and distributes mobile communications devices around the world and is widely known as the creator of Blackberry handheld smart phones (Livingston, 2008). The Blackberry, as a brand, gained a large consumer base internationally because it was the first one to offer handheld phones with push email – a technology that allows users to check their e-mails with their mobile phones. Although RIM captured majority of the market share since the company introduced Blackberry smart phones to the market, competing brands posed threats to RIM’s success. Brands like Apple and Samsung dominate the market while RIM struggles to maintain revenue and continue operations (Waters, 2006). The rise and fall of RIM make for an interesting discussion especially when it comes to the analysis of elements of business.
Legal, Social and Economic Environments at RIM
The nature of an organization, including its strengths and weaknesses, could be determined and evaluated by its external environment – legal, social, or economic, among others. Moreover, managers in organizations should consider the condition of the external environment as important factors that could influence major management decisions. According to Gitman and McDaniel, managers should study how the changing landscapes in the organization’s external environment could affect business outcomes – for instance, “when economic activity is strong, unemployment rates are low and income levels rise… the political environment is shaped by the amount of government intervention in business affairs” (p. 30).
The legal environment at RIM is like any other organization. Since the company creates and distributes telecommunications solutions and mobile devices, RIM has legal obligations to follow specific rules and regulations, especially copyright laws. In 2006, the court threatened to cease the company’s operations in facilitating push email available in Blackberry devices due to a patent infringement issue between RIM, the service provider for Blackberry services and NTP (Twomey & Jennings, 2010). The threat in RIM’s operations prove how influential the external environment is, especially external legal factors, in influencing major business decisions in organizations. “Changes in one portion of the external environment can cause subsequent shifts in the customer environment or the internal environment” (Ferrell & Hartline, 2008). Due to the company’s legal obligations and standards, as well as past experiences regarding legal matters, RIM is determined to observe legal responsibility by focusing on “developing patent applications to drawing up contracts and trade agreements with partners and clients” (Research in Motion Limited, 2012).
RIM’s responsibility also spans internal and external social development. Similarly, the company’s decisions are influenced by current social trends in the market. Product development in the organization, for instance, is highly influenced by current and upcoming social trends. Push email used to be Blackberry’s primary offering to users. However, with the popularity of social networking, RIM chose to expand the company’s horizons and collaborate with application developers to introduce social networking applications on Blackberry devices (Hutt & Speh, 2009). In terms of the company’s internal social environment, RIM understands the value of nurturing interpersonal relationships in the workplace. Moreover, RIM “strives to create the best to create the best work environment for its employees through a variety of programs” (Research in Motion Limited, 2012a). RIM also implements various policies and programs to encourage and enhance employee engagement – employees displaying their commitment to productivity and efficiency – and employee wellness. RIM implements a Healthy@RIM program, which is “focused on engaging employees to promote a healthy and supportive work environment through wellness programs” (Research in Motion Limited, 2012b).
The economic environment at RIM is perhaps one of the most troubled aspects of the organization at present. The company used to have a large portion of the market share but with the entry of competitors like Apple and Samsung, RIM has fallen behind in sales. Therefore, the company’s economic environment is influenced by external factors, specifically the performance of RIM’s competition. Other economic considerations include expected cost for upcoming network wireless telecommunications services and operations cost (IGI Global, 2010).
Managerial, Operational, and Financial Issues at RIM
At present time, RIM is currently suffering from managerial, operational, and financial issues. Due to Apple and Samsung’s strong market leadership, RIM has fallen behind as proven by the company’s performance. The company’s failure could be attributed primarily to leadership issues that prompted change management and project management issues. When RIM’s market position was threatened by the success of Apple and Samsung subsequently, the company failed to develop and implement new strategies to catch up with the competition. RIM’s leaders, Lazaridis and Balsillie, failed to foresee future trends in mobile telecommunications and implement immediate changes to maintain its position in the corporate ladder. According to Castaldo (2012) from Canadian Business online, all organizations in the industry saw future trends and thus, were able to adjust their products and services accordingly. “Everyone—except maybe RIM—recognized competition would come to the smartphone market. Unfortunately, RIM reacted to Apple’s iPhone and Google’s Android operating system by ignoring them” (Castaldo, 2012).
In relation to the iPhones entry in the market, RIM’s managerial and operational issues involve the company’s inability to consider the factor of disruptive technology that Apple offered for the market. The company failed to take advantage of its research and product development strategies to expand its target market. Initially, RIM’s Blackberry services targeted business men who rely on email services to conduct work transactions. However, as push email and social networking became popular, RIM failed to extend its products to the average consumer. “RIM, rather than leverage its strong technical base to leapfrog Apple, has found itself constantly running to keep up as Apple and the others push the boundaries of the smartphone market” (Capron & Mitchell, 2012, p. 161). Moreover, RIM failed to develop a contingency plan “to quickly change direction in a fast-paced environment” (Swayne, Duncan, & Ginter, 2005, p. 441) in case the company faces tough competition.
RIM’s failure to launch competitive products and services also led to the company’s demise. Poor project management is another operational issue in the organization. Since 2005, the company has been releasing new mobile devices as well as software updates to maintain continuous improvements in device performance. However, despite the regular release or development of smart phones, RIM failed to capture the interest and attention of consumers. IN terms of quality and functionality, consumers flocked to Apple’s iPhone and other brands by Samsung and HTC. RIM failed to equal or surpass the product performance of the iPhone and other new models released by the competition. RIM’s latest software for Blackberry devices is Blackberry 10. Despite improvements in Blackberry software, the Blackberry 10 version is still unable to match the services of the competition, leading to operational difficulties and release delays (Business Week, 2012).
Aside from the inability of RIM to adapt to the changes in its external environment, management issues also plague the company. “…RIM during the past year portray a company that has grown unwieldy and unorganized, and where conflicting opinions and a lack of clear direction compound an already difficult situation” (Castaldo, 2012). Stockholders in the company were at a standoff, debating over the distribution of powers in the company. The stockholders debated whether the Blackberry brand should operate independently from RIM. The division in the company led to chaos, preventing the organization from moving forward and facing one of the major issues that it needs to address – its finances. At present time, the market is still unclear about the direction of RIM. While some speculate that RIM is about to dissolve in the coming year, others remain optimistic that the company would still be able to find a turning point for the organization.
The growth of RIM through the years illustrates the importance of business elements, especially within an organization’s external environment, in shaping business decisions and direction. When RIM introduced Blackberry phones as a solution to the problem of wireless communication for businessmen, the company gained a large market share because it was able to provide a unique product and service that appealed to a specific target market. However, the company failed to maintain its innovative streak by ignoring the signs of change and transition. Moreover, chaos at the top-management level, poor project management, research and development, product development, and operations caused problems for the organization, leading to significant losses and poor financial performance. RIM could have prevented its downfall if the company was able to consider the impact of external factors, specifically social factors, on market demand, integrate trends in the industry to product development plans, and develop a contingency plan in case of rapid transition.