Research in Motion - Managing Explosive Growth
RESEARCH IN MOTION
MANAGING EXPLOSIVE GROWTH
In the January of 2008, Research in Motion (RIM) is standing at the strategic juncture where important decisions need to be taken regarding global expansions. The biggest strategic issue it faces is to carry over yesteryears’ growth to next level through sustainable innovation at global level. Although its R&D expenditure has grown 6 times in the last four years, the ratio of R&D expenditure to sales has been halved. This ratio shows RIM is not utilizing its explosive growth to proportionately improve its technological innovations (important for sustainable revenue growth), which are the main sways of the mobile communication industry in which it is doing its business.
Mobile communications industry is highly competitive being oligopolistic in nature. Gauging RIM on the Porter’s five forces model, I understand there are many a threats to RIM. The biggest threat is the Threat of Rivalry. RIM’s direct competitors have much bigger market share globally and they are spending much larger amounts (as well as R&D ratios to sales) on the R&D activities in comparison to RIM. They are also trying to convert the industry into network industry by sharing of Mobile OS (e.g. Symbian) across companies. Some of them have already expanded globally for tapping talent in emerging countries, an idea which RIM is pondering over. RIM’s Blackberry products have a product differentiation (temporary competitive advantage) of being a smartphone originally built for busy professionals. But now, RIM is also trying to capture the consumer market, which is dominated by other companies. Also its rivals have also been able to develop effective similar convergence products in this market segment. This is the next big threat - Threat of Substitutes. Its rivals are already coming up with a wide array of smartphones. RIM’s Blackberry’s main rivals in this segment are Palm Treo, Sony Ericsson P900, Nokia E62, Motorola Q and Apple
MANAGING EXPLOSIVE GROWTH
In the January of 2008, Research in Motion (RIM) is standing at the strategic juncture where important decisions need to be taken regarding global expansions. The biggest strategic issue it faces is to carry over yesteryears’ growth to next level through sustainable innovation at global level. Although its R&D expenditure has grown 6 times in the last four years, the ratio of R&D expenditure to sales has been halved. This ratio shows RIM is not utilizing its explosive growth to proportionately improve its technological innovations (important for sustainable revenue growth), which are the main sways of the mobile communication industry in which it is doing its business.
Mobile communications industry is highly competitive being oligopolistic in nature. Gauging RIM on the Porter’s five forces model, I understand there are many a threats to RIM. The biggest threat is the Threat of Rivalry. RIM’s direct competitors have much bigger market share globally and they are spending much larger amounts (as well as R&D ratios to sales) on the R&D activities in comparison to RIM. They are also trying to convert the industry into network industry by sharing of Mobile OS (e.g. Symbian) across companies. Some of them have already expanded globally for tapping talent in emerging countries, an idea which RIM is pondering over. RIM’s Blackberry products have a product differentiation (temporary competitive advantage) of being a smartphone originally built for busy professionals. But now, RIM is also trying to capture the consumer market, which is dominated by other companies. Also its rivals have also been able to develop effective similar convergence products in this market segment. This is the next big threat - Threat of Substitutes. Its rivals are already coming up with a wide array of smartphones. RIM’s Blackberry’s main rivals in this segment are Palm Treo, Sony Ericsson P900, Nokia E62, Motorola Q and Apple