BLACKBERRY INTERNAL ANALYSIS 1
BlackBerry Internal Analysis
Companies have a complex internal structure that helps them toachieve their objectives. An external observer may not identify themanagement structure and the financial feasibility of the companywithout conducting a close analysis of a company. The internalanalysis of business brings to light its physical and intangibleresources that contribute to the achievement of goals and objectives.The tangible resources include the company’s finances, the physicalassets, and the technological investments. These are primary insupporting a company’s operation and hey determine the complexityof the activities carried out in the organization. The intangibleresources include the human resources, the creativity and innovationsin a company. Also, an internal analysis lays insight on a company’scapabilities, the capacity to combine human resources and thelogistical environment. This paper will discuss the internal analysisof BlackBerry by reviewing its physical and intangible resources aswell its capability to combine them to achieve its objectives.
BlackBerry has been in the mobile phone industry despite the stiffcompetition from other companies like Samsung, Nokia, and Apple. Thecompany enjoys the loyalty of many clients who value theirapplications that are distinct in the markets. After entering themarket in 1999, BlackBerry sought to revolutionize the mobile phoneindustry by developing user-friendly applications that are in linewith the dynamic culture. Its products are a preference for customerswho value security while using their phones. For this reason, it is amajor supplier to the G-7 countries and has a significant share ofthe market in China, India, and Europe. Despite facing managementchallenges for several years, the company is set for a comeback toreclaim its position in the competitive and highly innovative mobilephones industry.
In the past few years, BlackBerry has not recorded desirablefinancial results. Its revenues experienced a drop from 19,907million dollars in 2011 to 11,073 million dollars in 2013(BlackBerry, 2013).The significant drop was attributable to reducedshipment volumes ad reduced prices of hardware. After the coming ofthe Chen, the new Chief Executive Officer, the company has made asignificant effort to achieve its focused come back in the market. Aclose analysis of the second quarter of the 2016 financial report cangive the actual financial position of the company and possiblypredict the near future performance. In the second quarter of 2016,the Non-Generally Accepted Accounting Principles was 491 milliondollars (BlackBerry, 2015). The breakdown of this revenue was brokendown as follows. 15% was accrued from the sale of software, and 43%was earned from service access fees. 41% of the revenue resulted fromthe sale of hardware. This reflected an increase from the firstquarter of the year due to additional 2,400 new customer winnings(BlackBerry, 2015).
However, despite the earnings, the share lost by 0.13 dollars, andthis amounted to 66 million dollars. It brought the net income forthe second quarter to 51 million dollars. The cash investments forthe quarter went up to 100 million dollars and the cash, andinvestment balance increased to 3.35 million dollars, and this was animprovement of 37 million dollars over the first quarter fiscalquarter. The Non-GAAP gross margin currently stands at 40.09%(BlackBerry, 2015). There are prospects of the third quarter balancebecoming stable and the previous after the company acquired the AtHocand the negations that are underway to acquire Good Technology. Thecompany also has plans to launch a flagship handheld device that willrun on the Android OS with the security features of Blackberry(BlackBerry, 2013). It will attract new customers and increase thesales. The company enjoys its current position since it has no debtbut it overstates its current position since there are no clearindustry averages. Drawing from the current report, Chen seems tohave an objective mission to put the employees focused on achievingthe company`s objectives and retaining a significant share in themarket.
BlackBerry has an extensive retail tradition that aims at sellingtheir products to generate cash to cover the expense and achieve highprofits. Currently, the company controls 1.6 million square feet ofoffice space in its headquarters in Waterloo. Investments analystsvalue this property at roughly 1 billion dollars. Most of this spaceis instrumental in housing business activities like research,manufacturing and other administrative functions. The companycontracts Jabil Circuit Inc. for manufacturing and they focus ondesign and networking infrastructure. A combination of the company’sphysical assets including the cash at hand is about 4.7 billiondollars (Thomas, 2013). .
The mobile technology companies are very competitive, and BlackBerryhas to keep pace with the trends in the industry. Some of thetechnology innovations that companies had in the past have becomeobsolete, and they do not hold any financial value. At one time,blackberry was a leading company in innovation until when otherdynamic companies entered the industry and set high standards forothers. They entered with a generic feature, and this intensified thepace of technological innovations. However, BlackBerry still enjoyssome of the strongest innovations in the industry (BlackBerry, 2013).The company enjoys its security feature that gives it a competitiveadvantage over other generic feature offered by competitors. Thecompany’s enterprise solution presents a pair of encryption optionsfor all the data transmitted between the device and the software(BlackBerry, 2013). There is a direct path for information from thenetwork provider to the software in the Blackberry’s devices. Thetechnology facilitates the transportation of data in an encryptedmode and seals all chances of decrypting it before reaching thecompany’s firewall.
Also, the company has earned a place in the technological innovationsby providing software that includes secure Internet browsers,application controls, policy management, and an ad in encryptionsupport for both PGP and S/MIME (BlackBerry, 2013). It also providesits users with a completely partitioned work and personal systems. The company has, therefore, become envy in the validatedCryptographic Module Validation and Program that supports informationsecurity. It, therefore, stands out as the only company that meetsthe Canadian and United States mobile technology regulations. Anothermajor technological advantage that the company enjoys is the uniquesynchronized feature in its devices. They can be synchronized tomultiple computers in a simultaneous way to include the Near FieldCommunications (BlackBerry, 2013).
BlackBerry invests a lot of resources in human resources both theirprofessional growth and providing them with enviable perks. After itsinception, the company employed a huge number of workers to satisfythe demand in the industry. The number of workers has been reducedgradually to avoid encountering high costs of production. In 2011,the company reduced its workforce by laying off 2000 employees acrossthe word. The move reduced the number of workers by 10% to settle at17,000 employees across the globe (Robbins, 2015). In 2012, thecompany lid of another 5,000 employees as a cost saving initiativeand turnaround efforts. In 2013, a group of 4,500 workers foundthemselves jobless and the company settled for 20,000 employees forpeak reasons (Robbins, 2015). When John Chen rose to the position ofthe CEO, he focused on reducing the cost of production by the futurelaying off an unspecified number of workers.
Despite the massive thinning taking place in the company, theavailable human resource works together to develop uniqueapplications. These give the company an enviable reputation in theindustry. BlackBerry ha a group of loyal engineers who developcounter products to beat the competition and keep the companyrelevant in the industry. Some of the notable products they have comeup with include the BlackBerry Tablet that was launched on April 2011as an alternative to Apple iPad. They upgraded it in 2012 afterreceiving criticism on its lack of native email and calendaringservice. Another high-end device is the BlackBerry 10 (QNX) thatreached the market in 2013. Investing in their growth serves as animportant factor for their retention bearing in mind that thecompetitors are allow poaching for talents to beef up their teams.The 20,000 employees work in the different locations in Canada,Europe, China, and Singapore, and they enable the company to maintainan international face.
In business, the company`s image is a major contributing factor tothe association that consumers create with it. Apart frommanufacturing high-quality products, companies must go an extra mileof intensifying their corporate social responsibility to earn a goodreputation. BlackBerry has earned itself a desirable position both inAmerica and overseas. The company came into existence when the worldwas experiencing a drastic shifting the use o mobile phones. Thetransformation from RIM to Blackberry was to address the gap thatexisted in the mobile phone demand and the American region as well asin the international markets (Rocha, 2014). The management used aunique approach to portraying the company’s products as high-end.Unlike the conventional mobile phone companies that shared operatingsystems, BlackBerry used a unique OS, and it differentiated itsproducts from those of the competitors. First, the unique feature ofits products that ensure the security of information is a source ofreputation based on quality. For this reason, the defense departmentof the United States of America and the G-7 members’ procure theirdevices from BlackBerry. Only a few companies enjoy such aninfluential support (Rocha, 2014).
However, its financial performance in the last several years hasgreatly wounded consumers’ perception about its future. Consumerscan use the current information about a company to make a decision onwhere to inject their loyalty. Investors also use the information tomake an important decision on where to put their funds. Unfavorable,fiscal statements may be a result of a drop in share values, and thiscan affect the financial base of a company to great extents. Forexample, in between 2009 and 2013, the company lost its value, andthis resulted in position 93 in global ranking (Fauscette, 2013).Under the leadership of John Chen, the business is striving to regainits consumers trust, and their efforts are bearing fruits as observedin the second quarter of 2016 fiscal statement. During the quarter,the company brought on board 2,400 new customers. It can be said tobe a gradual process of reclaiming its reputation and reassuring itsloyal clients of a feasible future. However, it ah not fullyrecovered its share value despite making considerable strides inmaking profits. The second quarter resulted in a 66-million-dollarloss in the share capital (BlackBerry, 2015). This current positionis likely to make investors skeptical before deciding to put theirresources in BlackBerry’s shares.
BlackBerry has a significant patent portfolio both in America andoverseas. It dominates in the Canadian market with an approximatevalue of 2 billion dollars of the patented technological andinnovative ideas. Currently, the company claims 7,500 patents in theUnited States with about 42% also applying in other internationalmarkets in Europe, China, and India (Rocha, 2015). It therefore,receives a global security for its patented products. Some of thecommon hardware and software patented products include Security emailmessaging data delivery mobile technology, media and APP frameworks,gesture input key text prediction and touch screen. It has alsopatented the antenna, battery, housing and the Near Field Computers(Rocha, 2015).
As part of its mission, BlackBerry works towards developinghigh-quality products using unique applications. The management hasinstituted a strong internal environment to ensure that the resourcesavailable are optimally used. These range from, production, humanresource management, distribution, technological advancement amongothers (Cheng, 2013). The human resources department has put in placea team of dedicated workers who have been instrumental in developingsophisticated yet user-friendly products. In the recent past, therehave been leadership challenges of failure to be objective on thecompany’s mission and values.
However, the board of directors appointed John Chen whoseleadership has led to a promising second quarter fiscal statement. Inthe company, one of the most significant organizational resources isthe relationship that the company has with influential and powerfulgovernments. The United States of America Department of Defense is amajor receives its supplies from BlackBerry citing the security ofthe devices concerning information encryption. The G-7 also procuresdevices from the company (Rocha, 2014).
Understanding the needs of the customers is a primary factor thathelps BlackBerry remains relevant in the industry. However, there isa notable gap that exists between the company’s distributionstrategy and the one used by their main competitors including Samsungand Apple. The two companies are visible in many distributionplatforms, unlike BlackBerry, which uses specific sites. Thevisibility determines the number of consumers that gets informationabout the products. There is also a strain on the customerrelationship especially with the postponed launching of products,especially in the United States.
Value Chain Analysis
Most of the companies operating in the same industry a set of fairlysimilar primary procedures like production and other operationalprocedures. A company’s profits is dependent the level ofinnovation as opposed to the efficiency of its procedures. However,this does not rule out efficiency as a contributing factor to profitinflation but it cannot be an autonomous factor. When introduced to ahigh rate of innovation, it results in desirable results.
BlackBerry operates from several regions in the world and therefore,to meet the demand in these areas, it outsources most of itslogistical operations. The management identifies the characteristicsof the different regions and their economical feasibility andoutsources and allocates its logistics using the contextualknowledge. For example, the growing mobile use in India makes sit aprime location for its manufacturing and logistical applications(Thomas, 2013).
The company is aiming at regaining its market position, and it hasput in place a feasible strategic plan that accommodate the review ofits manufacturing, research, product portfolio, and devilmentstrategy. From 2011, the company has been working on a strategy toimprove its financial returns, and this has seen a major cut in itsworkforce to reduce the cost of production and overhead costs. Themanagement has also identified areas where of focus for anaccelerated growth. They include the introduction of new products inthe market to counter competition and allowing other companies toinclude some of their application in products from other companies.Samsung has been a primary partner in focus to dare the WorkLife andSecuSuite (Thomas, 2013). The strategy’s objective is to widen themarket base by extending the application to other users.
Most of BlackBerry’s outbound logistics are within the jurisdictionof the distributors in the mobile home industry. Since phones areusually packaged with service plans, it becomes easier to let thedistributors manage the process. There are very minimal challenges ininventory and transportation due to the high price per volume thatattracts extreme care while handling them
Marketing and Sales
Most of the marketing and sales producers are not under the directcontrol of the company. Phone contracts and service providers handlesetting the retail prices for the products (Thomas, 2013). For thiscontrol, methods of sale like the use of salespersons and customizedstore incentives are not within the control of the company. Forexample, the retail shops across the world used varied methods toattract their customer, and BlackBerry cannot analyze all of them toestablish control. However, the company does marketing on a largescale especially after the launching of a new product. Unlike itscompetitors, marketers fault the rather dormant marketing strategyused by BlackBerry. The trend may be explained by the strainedfinancial capacity in the past where the company has not been able toset aside a big amount of money for promotion services.
However, Cheng also confesses that the company has not paid enoughattention to the dynamic nature of the consumer markets, and this hasaffected the marketing decisions the management has made in the past.Although Blackberry relies on distributors to take the final productsto the final consumer, they have an understanding of the businessatmosphere since they receive premiums from consumers using e-mailservices (Cheng, 2013).
The services that a company renders to its customers strengthen thebond and loyalty between the two parties. BlackBerry has an elaborateyet efficient customer service that presents the customers withseveral avenues of reaching the manufacturer. The technicaldepartment has a very typical cookie cutter model for technologysupport. It includes a website with an online chat platform, a forum,and a knowledge database. Customers can also use the e-mail to seekinformation or present their grievances. For emergency services thatmay require immediate feedback, the company has a standby supportline (Sutter, 2011). The final products presented to the consumerscome with a one-year replacement warranty, and customers can get newproducts in exchange for those with software defects.
On October 12, 2011, the company’s services went off, and customerscould not get vital information or have their complaints addressed.Millions of the BlackBerry Smartphone users stayed offline for threeconsecutive days, and it highly inconvenienced people who rely ontheir phones to for business purposes. It raised a lot of concernabout the value that the company put on its client base with theaffected population taking to the social media to condemn and urgethe company to restore its services (Sutter, 2011). The managementquoted critical network problem and the generation of a large amountof backlog data that required a lot of time update. Although nopersonal data got lost in the ordeal, its reputation suffered a blow,and the incident is still major references for some clients.
Procurement involves the sourcing of inputs that are transformed intothe final products or services. BlackBerry is very particular in itsinputs the changing technology requires them to include a new list ofinputs anytime they are creating a new product. Mostly, the companydeals with products from other manufacturers and rarely do they dealwith raw materials. For example, they do not manufacture batteries,memory, and processors. The company procures them from differentcompanies that specialize in manufacturing the single products andassembles them in their plant. However, the procured products arespecialized as per the agreement between the company and thecontractor (Cheng, 2013).
Technology and Development
Technology is the primary factor that differentiates a company fromits competitors. For Blackberry, it had been a stronghold until whenthe company failed to observe the market trends and lost asignificant number of its customers to its competitors (Sikka, 2015).The company focuses on developing new products for the dynamicindustry. The company has two products that it plans to releaseshortly. They include the BBM Protected that us a secure mobilemessaging solution for enterprises and BES12 to support Android forwork (Sikka, 2015).
Human Resources Management
Human resources play an imperative role in achieving a company’sgoals and objectives. In the world, every company is seeking torecruit the best and retain a competitive team. BlackBerry’s humanresource management department recruits from some of the best schoolsin Canada and offers a market competitive remuneration for itsemployees well as giving them hefty perks. Its offices have adoptedan open layout with a warm atmosphere. The management also havesother motivational facilities including gyms, cafeterias, andsubsidized medical services.
The company’s administration has been unstable with several changesin the recent past. Thorsten Heins was dismissed to give room forJohn Chen, who has exhibited improved performance. In addition, thecompany has excised its administrative function of ensuring that itdoes not undergo massive loss by thinning the workforce with thelatest being in July 2015 when an undisclosed number of workers werelaid off. The signs of a comeback are evidence that theadministration plays an important role in BlackBerry. The previouslosses experience between 2009 and 2012 are attributable inadministration hitches. Chen believes that the strategy he has laidout for the company will enable it to overcome the currentclient-base and financial challenges (Cheng, 2013).
Assessment of Core Competencies
The major strength as it appears in the internal analysis lies inthree main areas. First, the company has a large number of patentedinnovations some of which are top notch in the communicationindustry. Secondly, its products are compatible with a largecollection of software and hardware. A good example is its continueduse in the Near Field Computer market. Also, the company has asignificant share in the Smartphone emerging markets like NorthAmerica. About 40 million of its customers are found in the emergingmarkets. In addition to this, the reputation that the company enjoysfor its secure devices is a competitive edge. It enjoys the supportof influential government institutions and companies and thisinfluence trickles down to individual clients (Market Line, 2013).
Over a previous couple of years, the company has delayed inintroducing new products in the market. The trend has made thecompany to lag behind it close competitors like Samsung, Google, andApple. For example customers waited for a long time before the launchof BB10 Smartphone and the dying anticipation resulted in its lessrealization of fewer sales than for BB7.
The company has not also been in a position to regain its financialposition. In the second quarter of 2016, the share capital is stillexperiencing a loss of 0.13 dollars (BlackBerry, 2015). The publicperception about the company is also a major source of weakness. Thepoor sale of BB10 is attributable to skeptical customers and publicopinion.
However, Chen describes the status of the company as feasible enoughto propel it to great heights. The position of the company as debtfree renders it as able to build on appropriateness administrativepractices and introduction of new products in the market to keep pacewith the competitors.
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