Research In Motion Limited Case Analysis
Introduction to Business
Research in Motion Ltd.
Strategy Analysis
Executive Summary According to their website, "Research In Motion Limited (RIM) (TSX: RIM, NASDAQ: RIMM) is a Canadian wireless and telecommunication equipment company. It is headquartered in Ontario, Canada and employs more than 17,000 people. It is famous as the production of the tablet and BlackBerry smartphone." (Research In Motion Ltd., 2012) With the increasing competition in the telecommunication industry and the development of smartphone technologies, more and more corporations enter into the mobile phone industry. RIM Ltd. is now in a dilemma of how to attract customers and recapture the market share to be the best one in the cell phone …show more content…
industry. The purpose of this report is to offer RIM Ltd. with the directions that it requires to achieve its business culture of “meeting the need of people who want simplicity, easing of use and speed, without having to think twice about it”. (Research In Motion Ltd, 2012) This report will make a comprehensive analysis of the current competitive situation of RIM Ltd. and the factors that affect its development. Then the business level strategies and corporate level strategies will be given so as the RIM Ltd. can improve and maintain its sustainable competitive advantages, becoming more competitive when compared to its competitors. This report includes specific information regarding RIM Ltd. ’s history, its current competitive situation analysis, forward 5 year business environment and proposed strategic adaptation. The business and corporate level strategies will help RIM Ltd. obtain its company goals and get a better development in the future.
TABLE OF CONTENTS
Introduction 1
Company History and Description
Current Competitive Situation Analysis 3 Industry Analysis Competitor Analysis
Business Level Strategy 6 Cost Leadership Differentiation
Corporate Level Strategy 8
Five Year Projection of Business Environment 11 Market Analysis Market Competitive Analysis Market Needs Strategy and Approach to the Market Strategic Model - SWOT
References 19
Appendices i Appendix A - Group Contract Appendix B - Reflexive Assessment of Group Processes and Peer Review iii Appendix C - Tables and Figures iv
Introduction The purpose of this report is to objectively analyze the strategy of the publicly listed Canadian Corporation.
Research In Motion Ltd. will be appraised and its strategies are analyzed. Then the purpose is to suggest business level strategy and corporate level strategy for Research In Motion Ltd. to adopt so that it can go out of its existent dilemma and keep its industry-leading positions in the future.
Company History And Description Research In Motion Limited (RIM) (TSX: RIM, NASDAQ: RIMM) is a Canadian wireless and telecommunication equipment company. It is headquartered in Ontario, Canada and employs more than 17,000 people. It is famous as the production of the tablet and BlackBerry smartphone. (Research In Motion Ltd., 2012) The company 's key products and services include the following: application software, wireless handheld communication devices, convergent devices phones, software development tools, BlackBerry wireless platform. (RIM Company, Products, 2012) The company operates in Europe, North America, and Asia Pacific. Mike Lazaridis founded SIM in 1984, (RIM Company, 2012) and served as its co-CEO along with Jim Balsillie until January 22, then the new CEO is Thorsten Heins. (Research In Motion Ltd., …show more content…
2012) In 1992, the company changed its focus from working with pagers to two-way wireless communication. In 1997, RIM was listed on the Toronto Stock Exchange, financing $150 million in a public offering, (Research In Motion, 2012) which sponsored the releasing of the BlackBerry, a wireless handheld computer. BlackBerry offered a six-line display and allowed two-way paging and basic emails. In 1998, RIM was nominated as one of "Canada 's Top 100 Employers" by Mediacorp Canada Inc, and was characterized in Maclean 's news magazine. (Research In Motion, 2012) The company was listed on the NASDAQ stock exchange in the USA in 1992, raising $250 million at the same time. In the same year, the company launched its iconic product---the BlackBerry 850 Wireless Handheld, which integrated wireless data networks, email, and a traditional QWERTY keyboard in a hand-held device. The BlackBerry caused an enormous sensation. The marketing demands extremely excel its supplies. As the introduction of the 850, RIM became the world’s fastest growing company, at least according to Fortune. (A History of RIM..., 2007) With the upgrading of voice and data transmission of the Blackberry, the smartphone began the revolution. The company laid off about 10 percent of its workforce because of massive operation losses. After the massive loss in fiscal 2003, RIM start to return to profitability by 2004 (March 1, 2003 to February 28, 2002) because of continuing strong sales. Afterwards, BlackBerry surpassed one million subscribers all over the world. By 2010, RIM still controlled 10.4 percent of the smart phone operating system market. (Research In Motion. Ltd, 2011) However, the good situation of RIM was not lasted too long. With the Apple and other product entering into the market, RIM is facing massive challenges. The top three competitors of RIM are Apple, Samsung and Google according to the statistics in Appendix C. (Appendix C, Figure I) The company’s financial conditions experienced great challenge in 2011. RIM missed its earnings forecasts and delayed its product launches, which led to the share price plummeting. (Research In Motion, 2012) Owing to the declined performance in summer 2011, many employees left the corporation. The company eventually had to cut 2,000 positions for the voluntary exodus in the mid-year. (Marlow, I, 2011, P. B1) To change the dilemma of RIM, the CEO Thorsten Heins announced a new OS, BB10, which he felt would "reverse RIM ' s fortunes."(RIM Ltd, 2012) The new mobile phone with BB 10 will be release in the beginning of 2013. We hope that Blackberry 10 could bring opportunity to RIM. With the business culture of “meeting the need of people who want simplicity, easing of use and speed, without having to think twice about it”, we look forward to seeing the BlackBerry 10 could enhance the sales of RIM and let RIM go up to the first-position in the telecommunication industry.
Current competitive Situation Analysis Industry Analysis “Economics define an industry as a group of firms that supplies a market.(Grant, 2010).” Since the prevail and convenience of borderless communication, many districts and countries without cell service in the last years are now provided with telecommunications because of the large efforts of big corporations, such as Samsung, Nokia, LTC, Motorola, TCL, LG, Apple, RIM, Compal, Arima, Sony, Huawei, etc.
As the progress of the mobile phone, the standard is also improving. With the need for smartphones continually increasing, the need for data retaining across networks. New technologies are emerging to meet the need such as 3G on AT&T and IOS operating system was explored by Apple Cor. to be used in Apple’s products such as
iPhone. Over the past few years, the mobile phone industry is one of the fastest growing industries in the world. As the rapid development of economy in developed countries, more and more people could afford to buy cell phones. Undoubtedly, mobile phones have become one of the major parts of our everyday life. We use mobile phones to communicate with parents and children. Business people use mobile phones to do their project and make video-conference and voice-conference. The arising of new technologies and the increasing demand make the mobile phone market worldwide. Worldwide smartphone markets will continue to achieve enormous growth as facilities access the Internet, achieve almost universal penetration, and support machine to machine (M to M) communications. According to Susan Eustis, lead author of the study, “Over one-half of all smartphones in the global market are made by Apple and Samsung.” (Wintergreen, 2012, P 1.) Competitor Analysis Research In Motion acts as a leader in the global telecommunication industry. Its main competitors are Apple, Google and Samsung. Other competitors include Nokia and HTC. Apple is one of RIM’s major competitors and also a industry-leader considering the manufacturing of cell phones, MP3 players, computers and tablet PC. Apple offers a portfolio of products including Macintosh (Mac) computing systems, iPods line of portable digital music and video players, iPhone handsets and iPad portable multimedia and computing devices. Apple also sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. Apple sells its products worldwide through its retail stores, online stores, and direct sales force and third-party cellular network carriers, wholesalers, retailers, and value-added resellers. The company offers the products across five operating segments: Japan, Americas, Europe, Asia Pacific and retail. “The company recorded revenues of $108,249 million in the fiscal year ending September 2011, an increase of 66.0% compared to fiscal 2010. Its net income was $25,922 million in fiscal 2011, compared to a net income of $14,013 million in the preceding year.” (Mobile Phones In Canada, 2012, P19) Samsung, another competitor of RIM. Samsung Electronic’s main transactions are the manufacture and distribution of consumer electronics, home appliances, semiconductor products, and communication products. Samsung has a number of subsidiaries and operates respectively. The company operates by three business parts: device solutions, digital media, telecommunications and others. The device solutions part is made up of semiconductor and liquid-crystal display (LCD) reporting parts. The digital media business part manufactures a number of products including audio-visual devices, digital TVs, printers and monitors. It also offers digital home appliances like washers, vacuum cleaners, air conditioners, ovens, refrigerators, and other appliances. The telecommunications part provides a wide range of related mobile products and solutions. (Mobile Phones In Canada, 2012, P29) Samsung is now possessing the largest market share in the phone market and compared to RIM, it is around six times more. (Appendix C) Google is also a major competitor of RIM. Google Inc. started as an online search firm, but it now provides more than 50 Internet products and services, from e-mail and online document creation to software for mobile phones and tablet computers. Additionally, with the acquisition of Motorola Mobility in 2012, Google is now enlarging its transaction to sell hardware such as mobile phones. Google 's broad product portfolio and size make it become one of the top four influential companies in the high-tech marketplace, along with Apple, IBM and Microsoft. Despite this myriad of products, its original search tool remains the core of its success. In 2011 Google earned 97 percent of its revenue through advertising based on users ' search requests. (Google Inc., 2012) However, with Google’s powerful strength and branding, no one can overlook its influence in the future smartphone market.
Business Level Strategy Research in Motion has strong beliefs and values that creates a strong and inspiring foundation of the company. According to their website, "RIM seeks to make a positive impact in our communities, engaging the talents and resources of our people and partners to harness he power of technology. RIM strongly believes in the important of education and works to inspire the next generation of minds...." (Research in Motion, Ltd.) RIM supports all their employees through a program called Proud2Be where they give back the company through fundraising and volunteering. According to Appendix D, the employees contributed approximately $201,000 to 182 organizations, they have supported 22 food banks globally, donated 2,458 toys for children at Christmas and many other voluntary and deeds that demonstrates the company 's values. RIM is also a proud partner of Free the Children charity where they strive to educate the awareness and education of children in order to shape our future leaders. Cost Leadership Research in Motion has been well known for its market of Blackberry smartphones and has been offered in many different phone companies. However, the low cost differentiation causes the company to have a competitive advantage. According to Appendix C, the comparison of the iPhone and BlackBerry clearly shows that with the purchase of a BlackBerry, a substantial amount of money will be saved. In results with the cost advantage, the RIM is able to attract more customers and sell their products at a lower price. In addition to Appendix E, the table states that there are certain sections where even with the BlackBerry plan having a lower cost, the offers are still the same such as 150 daytime minutes, 9pm start time for unlimited evening calls, 2500 SMS, caller ID, who called, SAF and 911 fees. Differentiation RIM believes that there are certain characteristics that gives itself a competitive advantage against its competitors that includes:
BlackBerry Cloud - RIM has used its advanced technology to have this wireless solution where the device is in constant connection with the network. One of its main establishments for BlackBerry smartphones is BBM and how it has become a leading mobile instant messaging app. Other features includes over-the-air distribution of applications, over-the-air calendar synchronization, over-the-air folder management, etc.
BlackBerry Messenger - one of the biggest distinguishers about BlackBerry smartphones is of its innovative and fast instant messenger program made specifically for BlackBerry users to communicate with each other known BlackBerry Messenger (BBM). Each device contains their own specific pin in order for it to communicate with others. These messages will be sent through the BlackBerry servers which is the reason for its faster service when receiving and sending messages.
Return of Investment - ROI provides customers with the fastest payback when purchasing a BlackBerry. The network efficiency causes the users of BlackBerry devices to gain lower data roaming chargers and lower cost of buying. RIM continues to enhance their workflow, personal productivity and managing the BlackBerry Cloud in order for BlackBerry users to improve with their device.
Addition of new products and devices - RIM introduced the new BlackBerry PlayBook device into the market in April 2011 where it continues to enhance its multitasking abilities. This tablet enables its users to obtain full touch screen experience while rapid responses. Soon after that, RIM released BlackBerry Playbook OS which is a free software to help benefit and improve the system within applications and content services.
Corporate Level Strategy
Income Statement
• Sales$15,056,000,000
• Earnings$-613,000,000
• Return on Equityn/a
Cash Flow
• Cash Flow$2,003,000,000
• Cash$1,511,000,000
• Current Ratio2.20
12 months ended Sep 01, 2012.
Trailing 12 month results shown above.
All data is in U.S. dollars. According to Appendix F, within the income statement it shows that earnings are in the negative, resulting in a $613,000,000 loss. With this extreme loss of money being evident, Research in Motion needs to come up with a different direction in which the company should innovate and branch into a different direction, using what they know in different industries to gain a competitive advantage newcomers may not have because currently they are losing money, with their objective being to maximize profits. The new companywide strategy that RIM should follow should be along the lines of innovating their phone designs, tablets, as well as operating software for both of their products. “Microsoft Corp. kicked off the Electronic Entertainment Expo on Monday by unveiling new software called Xbox SmartGlass that will allow Xbox 360 users to stream and share content across smartphones, tablets and TVs. It also announced that it was bringing its Internet Explorer browser to the console this fall. "Internet Explorer coupled with the power of Xbox will, for the first time, deliver a fast, fluid, intuitive Web experience in the living room," said Xbox Live corporate vice president Marc WhittenSmartGlass was demonstrated in several ways, turning a smartphone into a remote control used to surf the Web on a TV and utilizing a tablet as a way to display information about games, TV shows and movies that were simultaneously being played on a TV” . (Marc Whitten, 2011). Due to the fact that the Xbox 360, owned by Microsoft, will be coming out with this new technology based on tablets and smartphones, RIM should get in on the action and gain a competitive advantage by designing a product that is cheap, durable, and specifically designed for this new era of gaming, as well as other essential tablet software, aps, etc. . This is because when looking for a tablet to buy, consumers will look for a tablet that satisfies all their needs, and if they own an Xbox, their wants for a tablet, being one that will give them their best gaming experience as possible. They could also go to Sony, with the technological information they will gain from the Xbox experiment, and strike a deal with Sony to become one of the only tablet providers, other than Sony, that will incorporate the tablet gaming technology. Sony may get in on this due to the fact that Ninetendo already has the Wii U GamePad. “Wii U™ GamePad
The Wii U GamePad controller removes the traditional barriers between games, players and the TV by creating a second window into the video game world. It also offers a new way for viewers to engage with their favorite entertainment. The GamePad incorporates a 6.2-inch, 16:9 aspect ratio LCD touch screen, as well as traditional button controls and two analog sticks. Inputs include a +Control Pad, L/R sticks, L/R stick buttons, A/B/X/Y buttons, L/R buttons, ZL/ZR buttons, Power button, HOME button, -/SELECT button, +/START button, and TV CONTROL button. The GamePad also includes motion control (powered by an accelerometer, gyroscope and geomagnetic sensor), a front-facing camera, a microphone, stereo speakers, rumble features, a sensor bar, an included stylus and support for Near Field Communication (NFC) functionality.
It is powered by a rechargeable lithium-ion battery and weighs approximately 1.1 pounds (500 g). (Wii U Technical Specs, 2012). This is similar to the Xbox Smartglass project, and since the Sony PS3 does not have anything similar to these two, they will fall behind due to the competitive advantage the other two leaders in the gaming industry have. This is why Sony may hop on board with RIM, where the latter company receives a competitive advantage being one of the only ones on the PS3 as well as being a competitor on the Xbox 360. They will then be competing in the gaming industry, the tablet industry, and the smartphone industry, three separate business industries, two being former industries but with more innovative ideas, and one industry that is totally new to them and the world, meaning they have an equal shot like everyone else on the Xbox market, and a better shot on the PS3 market. “Reliance on strategic alliances and relationships with third-party network infrastructure developers, software platform vendors and service platform vendors, including RIM’s ability to promote and advance the development of an ecosystem of applications and services for the BlackBerry 10 smartphones and the BlackBerry PlayBook tablets;” (Research in Motion, 2012). This states that they are planning on innovating the software technology for both smartphone and tablet platforms, as well as forming alliances with other companies. Therefore the firm should try and sneak into the gaming/tablet gaming industry, using the strategies noted previously, to gain any sort of profit due to the fact that they have lost so much that in order to gain the money lost they need to start taking risks or else they run the chance of losing their company. With this decision to go into this industry, they have a chance at becoming one of the leaders in the tablet and smartphone industry, due to the competitive advantage Research in Motion has over other providers with newer, more innovative, software that incorporates everything that a smartphone and tablet has today, as well as gaming specialization that other tablets and phones will not have.
Five Year Projection Plan Research in motion is motivated as an organization in the development, sale, service and maintenance of software and mobile solutions for both the short and long-term care market.It is a company that provides world class service and always puts the needs of our consumers first.In addition to this, it is a company that is driven by ideas. "We believe that innovation and collaboration will foster sustainable growth for our business"( Research in Motion, 2012). Such professional growth, would be attainable with the continued effort to excel in a competitive environment, providing World Class service at a sensible cost for consumers. The strategic advantage that RIM that sets the company aside from competitors, is the ability to adapt to an ever changing technological environment. Providing quality products and services; Research In Motion (RIM) is the company behind the innovative and award-winning BlackBerry product line. In order for Research in Motion to be successful in the future, it is this type of quality and competitive edge that will lead the company down the pathway of continued growth and success. Market Analysis
In this market analysis, we must take into consideration the company today, its competitors, consumers and any future business ventures. The market today is a direct foreshadow for the technological footprint that companies such as RIM will leave for tomorrow. As such, Research in Motion must account the many variable factors that may arise as well in the next five years. The current trends of the mobile and handheld software network are as follows; consumers ' have the require taste for multi-use high functioning mobile devices such as smart phones with high processing operating systems. the days have passed where any product was made to last a lifetime. It is a world of if it 's broken don 't fix it; in the sense that, you are able to replace your once top of the line device with a newer model with more applications and a faster processor in only a few months ' time. This new trend is seen in many forms of production, and is now widely accepted by the consumer market. It is the idea that today 's population wants newer, faster and bigger in the sense of capabilities. Market Competitive Analysis
One of the key components of determining your own success is based on how you compare to competitors in your specific market. In a recent poll " Score data, 32.8% of Canadians own a smart phone. However, narrowing down to mobile operating systems, the data reveals that the top smart phone platform for March 2011 is RIM™s BlackBerry with 42% of smart phone subscribers. Second up, following RIM, is Apple with 31%. The remaining of the statistics are made up from Google™s Android with 12.2%, Nokia™s Symbian with 6.4% and Microsoft with 5.1%." (iPhone in Canada 2011) This leads to inclination that RIM stock is on the rise. However, this is not the case. It is important to recognize that both Apple (iPhone) and google (Android) are currently growing in the Mobile device sector.
Respectively, both the increase in software capabilities as well as faster processors and greater network connection is the ever-growing trend in hand-held devices. An analysis of both Google Android and Apple iPhone appear to be designed for demographics from all walks of life. The Apple iPhone allows for people to talk across provinces using the application termed, "face time". The idea that a mobile device that is able to fit in the palm of your hand can connect people thousands of miles away gives the consumer extra leverage to lean towards the competitors product. The mobile device network is one that must appeal to several demographics and adhere to the wants and needs of its consumer. In the future, it is likely that the direction of the industry will produced by the these top three competitors. In order to be successful Research in Motion must target all the market segments with initial focus on research and development of current product.
Such product diversity, as well as an increase significant ease of use of products will attract new customers . Converting numerous customers from competitive products to Blackberry, through a positive customer experience will allow for a continual growth over the long term. Time is a critical commodity in the long-term, success of a company.Setting a high product standards at a reasonable price will be very attractive to long-term consumers who are paying several hundred dollars per device. This segment of Research in motion of product quality will be far more user friendly than those products currently on the market.
Market Needs
The cellular market requires a highly functional product that is cost effective and easy to use. Research in motion in order to counter-act the competitors in their marketplace; must provide more product services, easy accessible product assistance, and continuous growth in there software, research and development sector to stay atop the main producers of the mobile networking world. In addition to this, the active cellular marketplace in order to be sustainable in the long run must account for the aging population. Clearly, the proportion of older citizens is growing and will continue to do so with the aging of the baby boomers. Following the trend in the mobile usage sector. It is evident that people from all ages are currently using smart phone devices. Applications that appeal to both young and old must be readily available in order to maximize sales. If the trends within the marketplace remain constant, that it appears that children will soon be talking across play grounds with high-tech mobile devices. Lastly, the needs of such a diverse marketplace may only be met by those that are willing to change, resistance to change could be detrimental to the long-term success of any company within the market.
Albert Einstein once said, “Insanity is doing the same thing over and over expecting a different result” Strategy and Approach to the Market
RIM has for the most part attempted to appeal to the business class of the market.
Creating advertising the blackberry smart phone as the best option for CEO’s of large companies’; to small business owners on the go. This has been the staple of their commitment to their customers and has been for several years. However it is imperative that with any strategy there is also current modifications made in order to adhere to the constantly changing environment. It is important to view everyone in mobile network of business as potential customers. A new strategic approach, of more touch-screen, higher processing software, user- friendly applications, for all ages and demographics must be adopted in order to compete with companies such as apple. More cost effective ways of producing these products will save money for both the company and its consumers.
An approach through the market by internet, direct email advertising, advertising on such sites as Face book, and high-processing video websites such as YouTube as well as traditionally advertising will also help boost sales. One of the key ingredients to success is to improve the customer service of existing customers to insure technological approach must be taken to appeal to the future demographics in their consumer base. If Research in Motion does not produce higher quality products to compete with the likes of the Apple I-phone than the future of the Company looks dim, and the stock of RIM and value of the company will only diminish at a steady rate.
Strategic Model Among many strategic models to run a successful business like that of RIM (Research in Motion) in the present competitive business environment. SWOT model is chosen for this study. SWOT model gives a comprehensive picture of a company with its strength, weakness, opportunities and threat. In order to better evaluate RIM as a whole it is essential that we use such techniques to establish the productivity and potential flaws in the current structure of the organization. In the following model, it will reveal the potential the company is capable of however, due to certain weaknesses and threats it has given them a disadvantage in the market. Strengths RIM has a variety of strength 's beginning with its manufacturing of high technology products. Among these strengths, are those of the research and development sector. The main focus of the organization is their mobile device, the BlackBerry. An area which prides itself on being top of the line and the best option for any person in the world of business. Products are exclusive, unique and have very good quality in which existing and new customers are attracted. An important strength is that the RIM organization is very organized and competent within the management revolving around talent. Corporation is very strong and is very advancing with technological products in order to improve the quality. RIM has a very successful established reputation globally thus causing RIM to be a trusted brand and company. RIM provides a extensive customer care capabilities which helps the them gain the trust of their customers. Their incentive of balancing IT and consumer demands has led RIM a market leading role in the market. Weaknesses The competitors of RIM can cause a great affect on its ability to satisfy consumer needs because its competitors is capable of achieving it before the BlackBerry devices can. Apple and Android smartphones are two companies coming out with newer, more innovative technology. blackberry may struggle to keep up due to the fact that these companies’ phones focus largely on touch screen technology, while the blackberry only has 2 phones that use the touch screen form of technology. As well as the fact that the service blackberry provides has been subject to outages, service losses globally, and the fact that Android and Apple cannot experience a global outage, makes it that much more threatened by competitor innovation.
Opportunities With the ever growing IT management team, they are all striving to improve and enhance its technologies through new products and devices. BlackBerry 10 is a new platform that all BlackBerry products will run on will be the new blackberry 10 software. This is opportunistic because it provides customers with a new look on the BlackBerry products as well as 2 new phones that will accompany the new platform as well as run off of the system. This also creates hype around the release of the software and phones bringing the blackberry community together and creating excitement for loyal consumers. "We look forward to getting BlackBerry 10 in the hands of our customers around the world." (Thorsten Heins, 2012). Moreover, with the experience of making mistakes in the past, , it creates opportunity to learn from their mistakes, and capitalize on that knowledge to execute objectives at the right times to achieve their goals. "RIM delayed the roll-out of the BlackBerry 10 phones to the first quarter of 2013 so as not to repeat the errors that surrounded the PlayBook launch." (Thorsten Heins, 2012).
Threats When the first BlackBerry was launched, consumers were drawn to it due to the fact of it being the first smartphone because of its cutting edge technology. They have kept the same design, and have slowly upgraded their unique operating system, but because of the consumer taste change, people have gone to the touch screen phones of Android and Apple software. Furthermore, studies have shown that people who have used the BlackBerry phone have been the recipients of health issues, which will most certainly draw people away from the company. “Excessive use of BlackBerry (BB) and other mobile communicative devices can cause physical health impact as earlier discussed in the first part of this special report. Although the “BB syndrome” is well-known for trigger finger, it can also refer to related mental health problems, espec ially BB addiction, which is widely spreading and can be observed from some BB users." (Execussive Use of BlackBerry Related to Mental Health Problems, 2010).
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Appendix C
Appendix D
Appendix E
AppendixF
Research in Motion Ltd.
Strategy Analysis
Executive Summary According to their website, "Research In Motion Limited (RIM) (TSX: RIM, NASDAQ: RIMM) is a Canadian wireless and telecommunication equipment company. It is headquartered in Ontario, Canada and employs more than 17,000 people. It is famous as the production of the tablet and BlackBerry smartphone." (Research In Motion Ltd., 2012) With the increasing competition in the telecommunication industry and the development of smartphone technologies, more and more corporations enter into the mobile phone industry. RIM Ltd. is now in a dilemma of how to attract customers and recapture the market share to be the best one in the cell phone …show more content…
industry. The purpose of this report is to offer RIM Ltd. with the directions that it requires to achieve its business culture of “meeting the need of people who want simplicity, easing of use and speed, without having to think twice about it”. (Research In Motion Ltd, 2012) This report will make a comprehensive analysis of the current competitive situation of RIM Ltd. and the factors that affect its development. Then the business level strategies and corporate level strategies will be given so as the RIM Ltd. can improve and maintain its sustainable competitive advantages, becoming more competitive when compared to its competitors. This report includes specific information regarding RIM Ltd. ’s history, its current competitive situation analysis, forward 5 year business environment and proposed strategic adaptation. The business and corporate level strategies will help RIM Ltd. obtain its company goals and get a better development in the future.
TABLE OF CONTENTS
Introduction 1
Company History and Description
Current Competitive Situation Analysis 3 Industry Analysis Competitor Analysis
Business Level Strategy 6 Cost Leadership Differentiation
Corporate Level Strategy 8
Five Year Projection of Business Environment 11 Market Analysis Market Competitive Analysis Market Needs Strategy and Approach to the Market Strategic Model - SWOT
References 19
Appendices i Appendix A - Group Contract Appendix B - Reflexive Assessment of Group Processes and Peer Review iii Appendix C - Tables and Figures iv
Introduction The purpose of this report is to objectively analyze the strategy of the publicly listed Canadian Corporation.
Research In Motion Ltd. will be appraised and its strategies are analyzed. Then the purpose is to suggest business level strategy and corporate level strategy for Research In Motion Ltd. to adopt so that it can go out of its existent dilemma and keep its industry-leading positions in the future.
Company History And Description Research In Motion Limited (RIM) (TSX: RIM, NASDAQ: RIMM) is a Canadian wireless and telecommunication equipment company. It is headquartered in Ontario, Canada and employs more than 17,000 people. It is famous as the production of the tablet and BlackBerry smartphone. (Research In Motion Ltd., 2012) The company 's key products and services include the following: application software, wireless handheld communication devices, convergent devices phones, software development tools, BlackBerry wireless platform. (RIM Company, Products, 2012) The company operates in Europe, North America, and Asia Pacific. Mike Lazaridis founded SIM in 1984, (RIM Company, 2012) and served as its co-CEO along with Jim Balsillie until January 22, then the new CEO is Thorsten Heins. (Research In Motion Ltd., …show more content…
2012) In 1992, the company changed its focus from working with pagers to two-way wireless communication. In 1997, RIM was listed on the Toronto Stock Exchange, financing $150 million in a public offering, (Research In Motion, 2012) which sponsored the releasing of the BlackBerry, a wireless handheld computer. BlackBerry offered a six-line display and allowed two-way paging and basic emails. In 1998, RIM was nominated as one of "Canada 's Top 100 Employers" by Mediacorp Canada Inc, and was characterized in Maclean 's news magazine. (Research In Motion, 2012) The company was listed on the NASDAQ stock exchange in the USA in 1992, raising $250 million at the same time. In the same year, the company launched its iconic product---the BlackBerry 850 Wireless Handheld, which integrated wireless data networks, email, and a traditional QWERTY keyboard in a hand-held device. The BlackBerry caused an enormous sensation. The marketing demands extremely excel its supplies. As the introduction of the 850, RIM became the world’s fastest growing company, at least according to Fortune. (A History of RIM..., 2007) With the upgrading of voice and data transmission of the Blackberry, the smartphone began the revolution. The company laid off about 10 percent of its workforce because of massive operation losses. After the massive loss in fiscal 2003, RIM start to return to profitability by 2004 (March 1, 2003 to February 28, 2002) because of continuing strong sales. Afterwards, BlackBerry surpassed one million subscribers all over the world. By 2010, RIM still controlled 10.4 percent of the smart phone operating system market. (Research In Motion. Ltd, 2011) However, the good situation of RIM was not lasted too long. With the Apple and other product entering into the market, RIM is facing massive challenges. The top three competitors of RIM are Apple, Samsung and Google according to the statistics in Appendix C. (Appendix C, Figure I) The company’s financial conditions experienced great challenge in 2011. RIM missed its earnings forecasts and delayed its product launches, which led to the share price plummeting. (Research In Motion, 2012) Owing to the declined performance in summer 2011, many employees left the corporation. The company eventually had to cut 2,000 positions for the voluntary exodus in the mid-year. (Marlow, I, 2011, P. B1) To change the dilemma of RIM, the CEO Thorsten Heins announced a new OS, BB10, which he felt would "reverse RIM ' s fortunes."(RIM Ltd, 2012) The new mobile phone with BB 10 will be release in the beginning of 2013. We hope that Blackberry 10 could bring opportunity to RIM. With the business culture of “meeting the need of people who want simplicity, easing of use and speed, without having to think twice about it”, we look forward to seeing the BlackBerry 10 could enhance the sales of RIM and let RIM go up to the first-position in the telecommunication industry.
Current competitive Situation Analysis Industry Analysis “Economics define an industry as a group of firms that supplies a market.(Grant, 2010).” Since the prevail and convenience of borderless communication, many districts and countries without cell service in the last years are now provided with telecommunications because of the large efforts of big corporations, such as Samsung, Nokia, LTC, Motorola, TCL, LG, Apple, RIM, Compal, Arima, Sony, Huawei, etc.
As the progress of the mobile phone, the standard is also improving. With the need for smartphones continually increasing, the need for data retaining across networks. New technologies are emerging to meet the need such as 3G on AT&T and IOS operating system was explored by Apple Cor. to be used in Apple’s products such as
iPhone. Over the past few years, the mobile phone industry is one of the fastest growing industries in the world. As the rapid development of economy in developed countries, more and more people could afford to buy cell phones. Undoubtedly, mobile phones have become one of the major parts of our everyday life. We use mobile phones to communicate with parents and children. Business people use mobile phones to do their project and make video-conference and voice-conference. The arising of new technologies and the increasing demand make the mobile phone market worldwide. Worldwide smartphone markets will continue to achieve enormous growth as facilities access the Internet, achieve almost universal penetration, and support machine to machine (M to M) communications. According to Susan Eustis, lead author of the study, “Over one-half of all smartphones in the global market are made by Apple and Samsung.” (Wintergreen, 2012, P 1.) Competitor Analysis Research In Motion acts as a leader in the global telecommunication industry. Its main competitors are Apple, Google and Samsung. Other competitors include Nokia and HTC. Apple is one of RIM’s major competitors and also a industry-leader considering the manufacturing of cell phones, MP3 players, computers and tablet PC. Apple offers a portfolio of products including Macintosh (Mac) computing systems, iPods line of portable digital music and video players, iPhone handsets and iPad portable multimedia and computing devices. Apple also sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. Apple sells its products worldwide through its retail stores, online stores, and direct sales force and third-party cellular network carriers, wholesalers, retailers, and value-added resellers. The company offers the products across five operating segments: Japan, Americas, Europe, Asia Pacific and retail. “The company recorded revenues of $108,249 million in the fiscal year ending September 2011, an increase of 66.0% compared to fiscal 2010. Its net income was $25,922 million in fiscal 2011, compared to a net income of $14,013 million in the preceding year.” (Mobile Phones In Canada, 2012, P19) Samsung, another competitor of RIM. Samsung Electronic’s main transactions are the manufacture and distribution of consumer electronics, home appliances, semiconductor products, and communication products. Samsung has a number of subsidiaries and operates respectively. The company operates by three business parts: device solutions, digital media, telecommunications and others. The device solutions part is made up of semiconductor and liquid-crystal display (LCD) reporting parts. The digital media business part manufactures a number of products including audio-visual devices, digital TVs, printers and monitors. It also offers digital home appliances like washers, vacuum cleaners, air conditioners, ovens, refrigerators, and other appliances. The telecommunications part provides a wide range of related mobile products and solutions. (Mobile Phones In Canada, 2012, P29) Samsung is now possessing the largest market share in the phone market and compared to RIM, it is around six times more. (Appendix C) Google is also a major competitor of RIM. Google Inc. started as an online search firm, but it now provides more than 50 Internet products and services, from e-mail and online document creation to software for mobile phones and tablet computers. Additionally, with the acquisition of Motorola Mobility in 2012, Google is now enlarging its transaction to sell hardware such as mobile phones. Google 's broad product portfolio and size make it become one of the top four influential companies in the high-tech marketplace, along with Apple, IBM and Microsoft. Despite this myriad of products, its original search tool remains the core of its success. In 2011 Google earned 97 percent of its revenue through advertising based on users ' search requests. (Google Inc., 2012) However, with Google’s powerful strength and branding, no one can overlook its influence in the future smartphone market.
Business Level Strategy Research in Motion has strong beliefs and values that creates a strong and inspiring foundation of the company. According to their website, "RIM seeks to make a positive impact in our communities, engaging the talents and resources of our people and partners to harness he power of technology. RIM strongly believes in the important of education and works to inspire the next generation of minds...." (Research in Motion, Ltd.) RIM supports all their employees through a program called Proud2Be where they give back the company through fundraising and volunteering. According to Appendix D, the employees contributed approximately $201,000 to 182 organizations, they have supported 22 food banks globally, donated 2,458 toys for children at Christmas and many other voluntary and deeds that demonstrates the company 's values. RIM is also a proud partner of Free the Children charity where they strive to educate the awareness and education of children in order to shape our future leaders. Cost Leadership Research in Motion has been well known for its market of Blackberry smartphones and has been offered in many different phone companies. However, the low cost differentiation causes the company to have a competitive advantage. According to Appendix C, the comparison of the iPhone and BlackBerry clearly shows that with the purchase of a BlackBerry, a substantial amount of money will be saved. In results with the cost advantage, the RIM is able to attract more customers and sell their products at a lower price. In addition to Appendix E, the table states that there are certain sections where even with the BlackBerry plan having a lower cost, the offers are still the same such as 150 daytime minutes, 9pm start time for unlimited evening calls, 2500 SMS, caller ID, who called, SAF and 911 fees. Differentiation RIM believes that there are certain characteristics that gives itself a competitive advantage against its competitors that includes:
BlackBerry Cloud - RIM has used its advanced technology to have this wireless solution where the device is in constant connection with the network. One of its main establishments for BlackBerry smartphones is BBM and how it has become a leading mobile instant messaging app. Other features includes over-the-air distribution of applications, over-the-air calendar synchronization, over-the-air folder management, etc.
BlackBerry Messenger - one of the biggest distinguishers about BlackBerry smartphones is of its innovative and fast instant messenger program made specifically for BlackBerry users to communicate with each other known BlackBerry Messenger (BBM). Each device contains their own specific pin in order for it to communicate with others. These messages will be sent through the BlackBerry servers which is the reason for its faster service when receiving and sending messages.
Return of Investment - ROI provides customers with the fastest payback when purchasing a BlackBerry. The network efficiency causes the users of BlackBerry devices to gain lower data roaming chargers and lower cost of buying. RIM continues to enhance their workflow, personal productivity and managing the BlackBerry Cloud in order for BlackBerry users to improve with their device.
Addition of new products and devices - RIM introduced the new BlackBerry PlayBook device into the market in April 2011 where it continues to enhance its multitasking abilities. This tablet enables its users to obtain full touch screen experience while rapid responses. Soon after that, RIM released BlackBerry Playbook OS which is a free software to help benefit and improve the system within applications and content services.
Corporate Level Strategy
Income Statement
• Sales$15,056,000,000
• Earnings$-613,000,000
• Return on Equityn/a
Cash Flow
• Cash Flow$2,003,000,000
• Cash$1,511,000,000
• Current Ratio2.20
12 months ended Sep 01, 2012.
Trailing 12 month results shown above.
All data is in U.S. dollars. According to Appendix F, within the income statement it shows that earnings are in the negative, resulting in a $613,000,000 loss. With this extreme loss of money being evident, Research in Motion needs to come up with a different direction in which the company should innovate and branch into a different direction, using what they know in different industries to gain a competitive advantage newcomers may not have because currently they are losing money, with their objective being to maximize profits. The new companywide strategy that RIM should follow should be along the lines of innovating their phone designs, tablets, as well as operating software for both of their products. “Microsoft Corp. kicked off the Electronic Entertainment Expo on Monday by unveiling new software called Xbox SmartGlass that will allow Xbox 360 users to stream and share content across smartphones, tablets and TVs. It also announced that it was bringing its Internet Explorer browser to the console this fall. "Internet Explorer coupled with the power of Xbox will, for the first time, deliver a fast, fluid, intuitive Web experience in the living room," said Xbox Live corporate vice president Marc WhittenSmartGlass was demonstrated in several ways, turning a smartphone into a remote control used to surf the Web on a TV and utilizing a tablet as a way to display information about games, TV shows and movies that were simultaneously being played on a TV” . (Marc Whitten, 2011). Due to the fact that the Xbox 360, owned by Microsoft, will be coming out with this new technology based on tablets and smartphones, RIM should get in on the action and gain a competitive advantage by designing a product that is cheap, durable, and specifically designed for this new era of gaming, as well as other essential tablet software, aps, etc. . This is because when looking for a tablet to buy, consumers will look for a tablet that satisfies all their needs, and if they own an Xbox, their wants for a tablet, being one that will give them their best gaming experience as possible. They could also go to Sony, with the technological information they will gain from the Xbox experiment, and strike a deal with Sony to become one of the only tablet providers, other than Sony, that will incorporate the tablet gaming technology. Sony may get in on this due to the fact that Ninetendo already has the Wii U GamePad. “Wii U™ GamePad
The Wii U GamePad controller removes the traditional barriers between games, players and the TV by creating a second window into the video game world. It also offers a new way for viewers to engage with their favorite entertainment. The GamePad incorporates a 6.2-inch, 16:9 aspect ratio LCD touch screen, as well as traditional button controls and two analog sticks. Inputs include a +Control Pad, L/R sticks, L/R stick buttons, A/B/X/Y buttons, L/R buttons, ZL/ZR buttons, Power button, HOME button, -/SELECT button, +/START button, and TV CONTROL button. The GamePad also includes motion control (powered by an accelerometer, gyroscope and geomagnetic sensor), a front-facing camera, a microphone, stereo speakers, rumble features, a sensor bar, an included stylus and support for Near Field Communication (NFC) functionality.
It is powered by a rechargeable lithium-ion battery and weighs approximately 1.1 pounds (500 g). (Wii U Technical Specs, 2012). This is similar to the Xbox Smartglass project, and since the Sony PS3 does not have anything similar to these two, they will fall behind due to the competitive advantage the other two leaders in the gaming industry have. This is why Sony may hop on board with RIM, where the latter company receives a competitive advantage being one of the only ones on the PS3 as well as being a competitor on the Xbox 360. They will then be competing in the gaming industry, the tablet industry, and the smartphone industry, three separate business industries, two being former industries but with more innovative ideas, and one industry that is totally new to them and the world, meaning they have an equal shot like everyone else on the Xbox market, and a better shot on the PS3 market. “Reliance on strategic alliances and relationships with third-party network infrastructure developers, software platform vendors and service platform vendors, including RIM’s ability to promote and advance the development of an ecosystem of applications and services for the BlackBerry 10 smartphones and the BlackBerry PlayBook tablets;” (Research in Motion, 2012). This states that they are planning on innovating the software technology for both smartphone and tablet platforms, as well as forming alliances with other companies. Therefore the firm should try and sneak into the gaming/tablet gaming industry, using the strategies noted previously, to gain any sort of profit due to the fact that they have lost so much that in order to gain the money lost they need to start taking risks or else they run the chance of losing their company. With this decision to go into this industry, they have a chance at becoming one of the leaders in the tablet and smartphone industry, due to the competitive advantage Research in Motion has over other providers with newer, more innovative, software that incorporates everything that a smartphone and tablet has today, as well as gaming specialization that other tablets and phones will not have.
Five Year Projection Plan Research in motion is motivated as an organization in the development, sale, service and maintenance of software and mobile solutions for both the short and long-term care market.It is a company that provides world class service and always puts the needs of our consumers first.In addition to this, it is a company that is driven by ideas. "We believe that innovation and collaboration will foster sustainable growth for our business"( Research in Motion, 2012). Such professional growth, would be attainable with the continued effort to excel in a competitive environment, providing World Class service at a sensible cost for consumers. The strategic advantage that RIM that sets the company aside from competitors, is the ability to adapt to an ever changing technological environment. Providing quality products and services; Research In Motion (RIM) is the company behind the innovative and award-winning BlackBerry product line. In order for Research in Motion to be successful in the future, it is this type of quality and competitive edge that will lead the company down the pathway of continued growth and success. Market Analysis
In this market analysis, we must take into consideration the company today, its competitors, consumers and any future business ventures. The market today is a direct foreshadow for the technological footprint that companies such as RIM will leave for tomorrow. As such, Research in Motion must account the many variable factors that may arise as well in the next five years. The current trends of the mobile and handheld software network are as follows; consumers ' have the require taste for multi-use high functioning mobile devices such as smart phones with high processing operating systems. the days have passed where any product was made to last a lifetime. It is a world of if it 's broken don 't fix it; in the sense that, you are able to replace your once top of the line device with a newer model with more applications and a faster processor in only a few months ' time. This new trend is seen in many forms of production, and is now widely accepted by the consumer market. It is the idea that today 's population wants newer, faster and bigger in the sense of capabilities. Market Competitive Analysis
One of the key components of determining your own success is based on how you compare to competitors in your specific market. In a recent poll " Score data, 32.8% of Canadians own a smart phone. However, narrowing down to mobile operating systems, the data reveals that the top smart phone platform for March 2011 is RIM™s BlackBerry with 42% of smart phone subscribers. Second up, following RIM, is Apple with 31%. The remaining of the statistics are made up from Google™s Android with 12.2%, Nokia™s Symbian with 6.4% and Microsoft with 5.1%." (iPhone in Canada 2011) This leads to inclination that RIM stock is on the rise. However, this is not the case. It is important to recognize that both Apple (iPhone) and google (Android) are currently growing in the Mobile device sector.
Respectively, both the increase in software capabilities as well as faster processors and greater network connection is the ever-growing trend in hand-held devices. An analysis of both Google Android and Apple iPhone appear to be designed for demographics from all walks of life. The Apple iPhone allows for people to talk across provinces using the application termed, "face time". The idea that a mobile device that is able to fit in the palm of your hand can connect people thousands of miles away gives the consumer extra leverage to lean towards the competitors product. The mobile device network is one that must appeal to several demographics and adhere to the wants and needs of its consumer. In the future, it is likely that the direction of the industry will produced by the these top three competitors. In order to be successful Research in Motion must target all the market segments with initial focus on research and development of current product.
Such product diversity, as well as an increase significant ease of use of products will attract new customers . Converting numerous customers from competitive products to Blackberry, through a positive customer experience will allow for a continual growth over the long term. Time is a critical commodity in the long-term, success of a company.Setting a high product standards at a reasonable price will be very attractive to long-term consumers who are paying several hundred dollars per device. This segment of Research in motion of product quality will be far more user friendly than those products currently on the market.
Market Needs
The cellular market requires a highly functional product that is cost effective and easy to use. Research in motion in order to counter-act the competitors in their marketplace; must provide more product services, easy accessible product assistance, and continuous growth in there software, research and development sector to stay atop the main producers of the mobile networking world. In addition to this, the active cellular marketplace in order to be sustainable in the long run must account for the aging population. Clearly, the proportion of older citizens is growing and will continue to do so with the aging of the baby boomers. Following the trend in the mobile usage sector. It is evident that people from all ages are currently using smart phone devices. Applications that appeal to both young and old must be readily available in order to maximize sales. If the trends within the marketplace remain constant, that it appears that children will soon be talking across play grounds with high-tech mobile devices. Lastly, the needs of such a diverse marketplace may only be met by those that are willing to change, resistance to change could be detrimental to the long-term success of any company within the market.
Albert Einstein once said, “Insanity is doing the same thing over and over expecting a different result” Strategy and Approach to the Market
RIM has for the most part attempted to appeal to the business class of the market.
Creating advertising the blackberry smart phone as the best option for CEO’s of large companies’; to small business owners on the go. This has been the staple of their commitment to their customers and has been for several years. However it is imperative that with any strategy there is also current modifications made in order to adhere to the constantly changing environment. It is important to view everyone in mobile network of business as potential customers. A new strategic approach, of more touch-screen, higher processing software, user- friendly applications, for all ages and demographics must be adopted in order to compete with companies such as apple. More cost effective ways of producing these products will save money for both the company and its consumers.
An approach through the market by internet, direct email advertising, advertising on such sites as Face book, and high-processing video websites such as YouTube as well as traditionally advertising will also help boost sales. One of the key ingredients to success is to improve the customer service of existing customers to insure technological approach must be taken to appeal to the future demographics in their consumer base. If Research in Motion does not produce higher quality products to compete with the likes of the Apple I-phone than the future of the Company looks dim, and the stock of RIM and value of the company will only diminish at a steady rate.
Strategic Model Among many strategic models to run a successful business like that of RIM (Research in Motion) in the present competitive business environment. SWOT model is chosen for this study. SWOT model gives a comprehensive picture of a company with its strength, weakness, opportunities and threat. In order to better evaluate RIM as a whole it is essential that we use such techniques to establish the productivity and potential flaws in the current structure of the organization. In the following model, it will reveal the potential the company is capable of however, due to certain weaknesses and threats it has given them a disadvantage in the market. Strengths RIM has a variety of strength 's beginning with its manufacturing of high technology products. Among these strengths, are those of the research and development sector. The main focus of the organization is their mobile device, the BlackBerry. An area which prides itself on being top of the line and the best option for any person in the world of business. Products are exclusive, unique and have very good quality in which existing and new customers are attracted. An important strength is that the RIM organization is very organized and competent within the management revolving around talent. Corporation is very strong and is very advancing with technological products in order to improve the quality. RIM has a very successful established reputation globally thus causing RIM to be a trusted brand and company. RIM provides a extensive customer care capabilities which helps the them gain the trust of their customers. Their incentive of balancing IT and consumer demands has led RIM a market leading role in the market. Weaknesses The competitors of RIM can cause a great affect on its ability to satisfy consumer needs because its competitors is capable of achieving it before the BlackBerry devices can. Apple and Android smartphones are two companies coming out with newer, more innovative technology. blackberry may struggle to keep up due to the fact that these companies’ phones focus largely on touch screen technology, while the blackberry only has 2 phones that use the touch screen form of technology. As well as the fact that the service blackberry provides has been subject to outages, service losses globally, and the fact that Android and Apple cannot experience a global outage, makes it that much more threatened by competitor innovation.
Opportunities With the ever growing IT management team, they are all striving to improve and enhance its technologies through new products and devices. BlackBerry 10 is a new platform that all BlackBerry products will run on will be the new blackberry 10 software. This is opportunistic because it provides customers with a new look on the BlackBerry products as well as 2 new phones that will accompany the new platform as well as run off of the system. This also creates hype around the release of the software and phones bringing the blackberry community together and creating excitement for loyal consumers. "We look forward to getting BlackBerry 10 in the hands of our customers around the world." (Thorsten Heins, 2012). Moreover, with the experience of making mistakes in the past, , it creates opportunity to learn from their mistakes, and capitalize on that knowledge to execute objectives at the right times to achieve their goals. "RIM delayed the roll-out of the BlackBerry 10 phones to the first quarter of 2013 so as not to repeat the errors that surrounded the PlayBook launch." (Thorsten Heins, 2012).
Threats When the first BlackBerry was launched, consumers were drawn to it due to the fact of it being the first smartphone because of its cutting edge technology. They have kept the same design, and have slowly upgraded their unique operating system, but because of the consumer taste change, people have gone to the touch screen phones of Android and Apple software. Furthermore, studies have shown that people who have used the BlackBerry phone have been the recipients of health issues, which will most certainly draw people away from the company. “Excessive use of BlackBerry (BB) and other mobile communicative devices can cause physical health impact as earlier discussed in the first part of this special report. Although the “BB syndrome” is well-known for trigger finger, it can also refer to related mental health problems, espec ially BB addiction, which is widely spreading and can be observed from some BB users." (Execussive Use of BlackBerry Related to Mental Health Problems, 2010).
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Appendix C
Appendix D
Appendix E
AppendixF