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Case Details

Case Code: BSTR479
Case Length: 16 Pages 
Period: 1984-2015
Pub Date: --
Teaching Note: Available
Price:Rs.500
Organization : Blackberry Ltd.
Industry :Mobile Phone Industry
Countries : Global
Themes:  Business Strategy
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

Blackberry _Set for a Turnaround?

 
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EXCERPTS

 

THE FALL OF RIM

The 2007 launch of Apple’s iPhone brought about a sea change in the global mobile market and spearheaded a chain of events that led to the gradual downfall of RIM. Within a short period of time, Apple’s iPhone received an overwhelming response from mobile users the world over. It brought in the era of the consumer focused smartphones on which users could play games, take photographs, watch videos, and do a range of other tasks, which were not possible on Blackberry phones. In the early days, RIM’s top management did not believe the Apple iPhone was much of a threat; they thought that the device had several shortcomings such as a short battery life, minimal security features, and lack of ability to send e-mail (in the early versions)...

 

 
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REINVESTMENT OF RIM AND ENTRY OF JOHN CHEN

In mid-2013, Blackberry’s market share in the global smartphone market fell to 2.9%, from 4.9% in the previous year. Moreover, in the third quarter of 2013, the company made a net loss of US$ 4.4 billion, or US$ 8.37 a share, on revenue of US$ 1.2 billion. The company then announced that it was looking into various strategic alternatives including the option for sale.....

CHEN’S STRATEGY FOR A TURNAROUND

Chen brought in familiar faces from SAP and Sybase to fill in key executive positions at Blackberry. He claimed that he had a “one-third” strategy for employee management, wherein he hired trusted people from previous companies for a third, promoted another third from within the present company...

DEAL WITH FOXCONN
 

One of the first measures that Chen took was to enter into a deal with Asia-based mobile company Foxconn, to take over the task of design, production, and distribution of Blackberry phones for the next five years. Foxconn was expected to manufacture the new phones at its factories in Indonesia and Mexico...

BRINGING BACK BUSINESS CUSTOMERS
 

Chen listened to the long neglected core customer segment of Blackberry – the business users – to find out what they liked. According to Chen, the business users of Blackberry belonged to what he called the “regulated industry” that included banks, insurance companies, healthcare, and government entities. Due to their high level security requirements, employees in these industries were expected to stick to their Blackberry devices. Blackberry was the sole Mobile Device Management (MDM) provider that had the ‘Authority to Operate’ on the networks of US Department of Defense...

BLACKBERRY MESSENGER
 

Another key means through which Blackberry wanted to become more relevant in the mobile market and to build its brand value was through the ‘Blackberry Messenger’ (BBM). BBM was a free service for BlackBerry, Android, and iOS users. Chen wanted to spread the message that one did not need to own a Blackberry handset to become a Blackberry customer and that mobile users could still be customers of Blackberry through BBM...

QNX OPERATING SYSTEM
 

Chen believed that the QNX operating system was Blackberry’s most valuable asset with high potential to earn revenues for the company. QNX was an embedded OS that managed and connected climate control, navigation, and other functions in vehicles to the dashboard. One of the most unique aspects of QNX was that if a particular part of the system shut down or froze, the rest continued to operate. That kind of stability was considered to be crucial in certain circumstances, where a system crash could be disastrous...

INTERNET OF THINGS (IoT)
 

Blackberry felt that there was a lot of potential in the area of Internet of Things (IoT) – using the Internet to connect everyday electronic devices...

ROAD AHEAD
 

. For fiscal 2015, Blackberry had a loss of US$ 304 million on revenue of US$ 3.3 billion, mainly due to a fall in phone sales, services, and software. However, Blackberry had US$ 3.1 billion in cash and investments. Chen intended to use the money to further fund the turnaround...

EXHIBITS
 

Exhibit I: Market Share of Blackberry in Global Smartphone Market, As Of 2014