Since the mobile phone was invented, mobile phones have become the thing that we can’t live without in our daily life. Several generations of mobile phones have been developed, and thousands of models from different brands have sold in the market until today. Apple, Samsung, and several China brands like Huawei and Oppo have dominated in the cell phone market today, not many of us remember that the BlackBerry was once dominated in the cell phone market a few years ago.
Date back to the period before iPhone appeared on the mobile device market in year 2007, it’s seem a novel idea that using a calling device to send out text email, but it made possible from BlackBerry, which also attracted to numerous business users to support this brand. The unique features had caused the company success during the 2000s, but also caused the company’s downfall when the Android and iPhone dominate the mobile device market.
Figure 1.1 Mobile phone sales in the market during year 2008
According to the research statistics in the press release from Gartner.com, RIM (BlackBerry.Inc) had achieved 19.5% mobile phone sales in the market share in the mobile industry, which was also the second top seller in the Mobile industry after Nokia in 2008. However, the sale dropped dramatically, and reached the lowest in 2015, when BlackBerry only accounted for 0.31 percent of the market share in the mobile industry. (Statista.com, 2016)
When the company’s first BlackBerry mobile device was released, they named it “BlackBerry”, a mobile device that supported extra features and functionality such as Internet faxing, web browsing, push email, mobile telephone, text messaging, and other wireless information services. The new invention of the BlackBerry device had helped the company increase business performance. BlackBerry was once the pioneered Push Email mobile device in the market industry.
1.1 Company Background
RIM (Research In Motion Limited) founded by Mike Lazaridis and Douglas Freginis, is one of the companies that produce and develop software and mobile hardware since 1984 in Canada, later changing their company name to BlackBerry Limited. In 2007, the company hired Jim Balsillie as co-CEO when Freginis left the company. However, both Mike Lazaridis and Jim Balsillie failed to create another legend like Apple. The company reduced their employees to 4,534, and the revenue dropped to US$2.16 billion in year 2016.
1.2 Purposes and Problem Statement
The intention of this research proposal is to find out the factors that contribute to business underperformance. Based on the company history, the business once made a profit, and delivered good results. However, the business performance dropped drastically in recent years.
Figure 1.3 Blackberry/RIM’s revenue from 2004 to 2016 (in million U.S. dollars)*
According to the statistics provided by Statista.com, the revenue of the company keeps dropping since 2012 (from 28,423 millions in 2012 to 2,160 millions in 2016). In 2013, the company cut 40% of its workforce after nearly $1 billion in losses related to unsold-device inventory. (Nytime.com, Business insider, 2013) This research paper attempts to analyze the variety of factors that caused the fall of the company.
1.3 Significance of Research
The main purpose of this research paper is to know the factors that contributed to the underperformance of the business. Many possible reasons to cause once successful business performance going down. Some of the issues also highlighted In this paper, and further investigate the problem such as what is going wrong to the company, who is responsible for that and etc. This research paper will focus on the several main factors and further discuss in the literature review. The results of this research paper may help others to get more knowledge and insight on how one successful business fails suddenly. The research results also may help other researchers to further their research in a broader area, which is related to this topic.
1.4 Research Questions
There are several questions listed in this research paper and expect to further investigate on the issues. Questions are going to be asked based on the main issue that the business is underperformance, and the suggested reasons for the problem. The first question is what are the factors that contributed to business underperformance? The following question is, is it true that leadership and poor decision making is the main reason caused by business underperformance? The other question is whether the other factors that are suggested here such as marketing strategy, new product development and human resource management also caused business underperformance?
1.5 Research Objectives
The research objective of this paper is to find out the factors that caused the business underperformance of the company that was once successful a few years ago. BlackBerry was once a successful business in developing mobile phone devices by gaining lots of support by the government and the customer. Therefore, the research design aims to study the reason why one organization may fail when they already conquered the market. There are internal causes and external causes to cause one business underperformance suddenly. This research conducts, in order to find out the four factors being caused to business under performance, which are the leadership style and poor decisions making, marketing management strategies, new product development and human resource management.
1.6 Research Framework
The research framework in this paper is based on the suggested the reasons that caused to business underperformance in one organization. To find out what caused the firms that were once successful and failed suddenly, factors can be the internal factors or external factors. However, the study will focus on internal factors, which are, the leadership & poor decisions making, marketing management strategy, new product development and human resources management. Numerous scholar articles and research study have proved such statement.
2.0 Factors that contributed to poor business’s performance.
Numerous study researches had found the studies about factors that bring impact to the business growth of one organization are broad, however the internal factors are more crucial on the underperformance in one business.
2.1 Leadership and poor decision making.
Leadership and decision making is crucial for one company to fail or succeed in their business. There are numerous real examples to show unsuccessful attempts are made to solve a company crisis due to an inappropriate problem solving and decision making at the very beginning. (Augustine 2000, 3; Platt 1998, 133) Probably not a great idea that the company has two CEOs at the same time, Mike Lazaridis and Jim Balsillie served as CEO and co-CEO during the period that company’s performance went down.
Organization’s structure split between two heads may lead to numerous arguments on making decisions and strategy apply, those unnecessary arguments may cause unproductive results. Besides, this may cause different cultures and value beliefs to exist in one company. Probst and Raisch also have suggested the four factors associated with business failure, one of the factors is leadership; and closely associated with leadership are the ability to change and the organization’s culture. (Probst and Raisch, 2005) They also explained, the other three factors are only a “soft” issue, while it seems that the main issue is the leadership’s inability to change, and furthermore inability to create the company culture needed to support the business strategy. The company with two leaders may be inflexible on change and adjustment. The increasing instability and complexity in the mobile phone market have caused the management unable to make decisions wisely, and the situation became worse, when conflict between two leadership in the organization.
As Hammer and Stanton (1995) suggested, success of a plan needs “process orientation” by top managers, any decisions on product development, marketing management, human resource management etc may determine success or fail. In year 2007, when Steve Jobs unveil Apple’s first iPhone, the company still remain calm and only focus on their existing technology, had show both Mike Lazaridis and Jim Balsillie are unable to vision the change of the trend in mobile phone market, where cause them fail to catch up with other competitors such as Apple and Google due to failed in strategy and vision. Mike Lazaridis and Jim Balsillie also failed to anticipate that their target customer group (business professions) are not the customer group that drove the smartphone revolution. (Business Time, 2013)
One company’s failure is associated with managerial failure in operational judgment and strategy, or lack of experience. (Salazar, 2006) Furthermore, both Mike Lazaridis and Jim Balsillie are unable to discover the drawback of BlackBerry’s technology, and overcome it. Connon and Edmondson explained, leaders have an incentive to dissociate from mistake and failure, therefore, leaders often overlook their own mistake and failure. (Cannon and Edmondson, 2005)
- Marketing Management strategy
Other than leadership, marketing strategy is also the crucial part to cause one business success or fail. Marketing strategy is based on the four basic elements: choosing the right product, deciding the right price, applying the right promotion, also selling the product in the right place, and these become an important factor for a company especially in the manufacturing industry. (McCarthy and Perreault, 1993).
There is much evidence showing BlackBerry did not have a good marketing strategy on their product. For example, in 2009, the company had organized the” All You Need is Love” campaign, by targeting their consumer group (young mobile users), with Beatles tunes. (Blackberry “Love,” 2009) This had confused people because apparently the Beatles is a music band well known to older age groups of people. The marketing campaign has caused confusion, when we don’t know whether the young group or the old age group of customers is the target group of BlackBerry. (Budd, Matulich, Breakwell….2015)
According to Porter, segments differ widely in structural attractiveness and their requirements for competitive advantage brings about two crucial strategic questions, which are, the determination of where in an industry to compete, and the other is, which segments would focus strategies be sustainable by building barriers between segments. (Porter, 1985) Through the market segmentation, the company is able to provide the higher value to the target customers, by developing the correct market mix strategies by addressing the specific need and also the concern of the targeting group. (Ferstman C., & Muller E., 1993)
The leaders of BlackBerry, Mike Lazaridis and Jim Balsillie, have their own different views of the target segmentation in the market. Lazaridis insisted their target segmentation is the group from their existing market, which is the large corporations and business people, but Balsillie had a very different opinion and felt the consumer market was the future and wanted to change their target consumers. (Lynley, 2010).
The clear understanding of consumer’s needs and the market nature is important to marketing strategy. (Hutlink, Hart, Robben, & Griffin, 2000) Copper believed marketing knowledge and marketing proficiency is also important, playing a critical role in the outcome of a new developed product. Cooper also believed, a better understanding of consumer’s need, nature of market, and competitive environment are the elements of successful marketing. (Cooper, 1994; Soni & Cohen, 2004) In 2008, when Apple had good sales revenue on iPhone, RIM’s senior executives still insist that their target consumers only valued BlackBerry’s secure and efficient communication systems, instead of the access to broader Internet content with the mobile device. Apparently, BlackBerry had failed to understand what their consumer’s needs were.
- The New Product Development
Innovative products are the most important thing in Technology firm like BlackBerry, thus appropriate product development strategy may determine the business going to be successful or fail. New product development means the development of the existing product, the improvement of the product, product modification, or new brand development through the R & D process by the firm. (Kotler and Armstrong 2010).
Sometime New product development (NPD) may lead to business failure because it’s not always a successful process. The failure rate in some industries had reached 40% (Schmidt & Calantone, 2002), and some other industries approached 80% failure rate (Green, Barclay, & Ryans, 1995). In simple words, it’s a challenge to success in new product development, especially in the mobile phone industry. In recent years, some of the products developed by BlackBerry did not succeed as expected, such as The BlackBerry Playbook in 2011, BlackBerry Storm in 2008 and etc.
BlackBerry Playbook is the tablet developed by BlackBerry to compete with iPhone, however the product had consumed too much of the company’s resources and capital, and did not provide what the consumer’s need, eventually it became another failure product. (Griffith, 2013)
When the BlackBerry Playbook sale did not turn out as expected, the company’s chief executive Thorsten Hein announced the bad news that the company no longer continued any further work on the Playbook project, due to the concern of product performance and user experience. It happens the same as the other product from the company BlackBerry Storm. The product was planned to answer the Apple iPhone. However, the product did not receive good response from the market, due to the incredibly confusing interface that relied on a “clickable” screen. (Reisinger, 2008). The product failed to fulfill consumer’s needs and expectations. The worst comment was, one knew about the Storm or what it did, but it was supposed to be for the consumer market (Love What You Do, 2009). The failure of these products had a big impact on the company, in terms of reputation, company image, sales revenue, etc.
By investigating what is the reason that caused low success rates in new product development, Dougherty explained, some of the study research concluded several reasons, such as failing to understand customer needs. (Dougherty, 1992) Both BlackBerry playbook and BlackBerry storm product did prove the consequences of insufficient research and understanding on the consumer. Other than that, designing and developing the products that lack innovative new ideas also may cause failure in product development. BlackBerry still keeps repeating their mistake by developing smartphones with physical keyboards, while other famous brands like iPhone and Samsung already attracted consumers with fully touchscreen devices. Dougherty also believed there was a high possibility of failure when the product launched without regard to the realities of those who are going to use the product. (Dougherty, 1992)
BlackBerry had suffered from sales revenue decreasing the last few years because they applied the wrong “new product development strategy”. Some customers commented that the browser in the device was painfully slow, the touchscreen didn’t respond well, and sometimes the device froze and reset. (Wall Street Journal, 2015) It showed the firm did not pay enough attention and put enough efforts to fulfill what the customer’s need, in simple words, wrong direction on new product development strategy.
- Human resource Management
Human resource management is crucial for one company to sustain and grow their business. Some human resources may lead to one organization in critical condition. Lots of business fails due to incompetent of managing skills, or using inappropriate managing style and plan. (Taylor, Beechler & Napier, 1996). Therefore the main purpose of human resource management is to make sure the company is able to achieve success through the employee effort. Armstrong emphasized that human resources aim to support the organization’s effectiveness by developing policies in various areas, such as knowledge in management, talent management and generally creating a great place to work. (Armstrong, 2006) Undeniable training and development can lead to sustainable competitive advantage (Aragón-Sánchez, Barba-Aragón & Sanz-Valle, 2003).
Some of the research from a behavioral psychology perspective also argued that human resource management practices may lead to competitive advantage, as long as the skill and knowledge, attitudes and behavior were reinforced, which caused the result in lower cost and enhanced productivity. Therefore, human resource management plays an important role in a firm’s competitive advantage overlaps with the concept of efficiency of human resources strategy for effective performance. (Ozcelik & Ferman, 2006)
An appropriate human resource strategy included the high quality of policies and practices where integrated with business and company’s sustainability goals, likely to promote the positive outcomes, such as higher productivity and improved retention, increased employee engagement and also increased morale in the organization. As a result, a good brand image had developed, also increased sales and attracted potential recruits. (Meisinger, 2007)
Some of the organizations applied numerous human resource strategies and plans, in order to improve the quality of the resources and product, such as providing training and promotion to staff. Sometimes organizations also tend to cut cost production to increase profit or avoid loss in money. However, cutting cost strategy may lead to negative effects to the organization, for example employee layoff, reduce proper training, etc. (Evans, 1999) Some other scholar suggested cutting cost and wages, or downsizing the company may not be a sustainable approach for the organization to achieve globally competitive. (Gopalakrishnan, 2012) Employee layoff strategy not only affected the organization’s image, it also affected productivity as well.
Probably BlackBerry layoff 4,500 employees, about 40% of the workforce been reduced, is not appropriate strategy for the organization to sustain their business. However it did solved the financial issue in year 2013, when the sale revenue figure dropped. Employee layoff could bring to negative effect, because some of the management level leaders failed to see the payback of investments in their human assets, what they tend to see is, the human expenses is just the cost have to be minimized for business sustain. (Gopalakrishnan, 2012)
3.0 Research Methodology
This is a descriptive and qualitative research paper where respondents give their opinion about the factor that contributes to business underperformance. The research methodology going to be used in this research paper is to conduct a survey to the selected groups of respondents to answer a set of questionnaire, where they are required to give their opinion and insight about how business is going under performance. The selected population is 130 respondents in total.
The set of questionnaires aim to investigate the main factors that contributed to business failure or business underperformance by getting opinion and answer from the respondents. The questionnaire was created according to the literature and attempts of other researchers to create an appropriate instrument for the analysis and evaluation of firm underperformance. The questionnaire consisted of two main parts, there are 4 to 5 questions in the first part of the questionnaire, where to ask about the age and gender of the respondent, also where is the business located and which business industry their business is in. The main purpose from part one of the questionnaires is to get more details from the participant group for further analysis and evaluation work.
The second part of the questionnaire is divided into four sections according to the four factors that contribute to business underperformance. Every section in part two consisted of five questions, where all participants gave their answer through the interview.
Section one in part two aims to investigate the first factor that contributes to business underperformance, which is the leadership style and poor decisions making. The participants are required to answer 5 questions related to the sub-topic. The selected group has years of experience in business management therefore their answers and opinions are valued for further study in this topic. For example, a question will ask them whether they agree or not with the statement that, once the leader has made the wrong decision, and gives the wrong direction to the subordinate, may lead to undesired consequences.
Section two will further investigate the second factor, which is marketing management strategy. Respondents are required to answer the questions by giving their own opinion, whether they agree or not with the statement that bad marketing plan and strategy may lead to decrease of the sale. Section three continues with the third factor, which is the new product development. The respondents also need to make judgment whether a good product developed has already determined the sale revenue. Section four question is about the fourth factor which is the human resource management strategy. Sample question will ask the respondents whether they agree or not, that bad human resource management strategy also may lead to undesired consequences, for example layoff decision making to secure the firm’s financial problem.
3.1 Sample and the Collection of Data
The qualitative data will be collected from the respondents during the survey. There are two groups of respondents to answer the questionnaire, the first group of the selected respondents are those who are the director of the company, entrepreneur or who own their business, the second group of the respondents are the senior executive and executive level employees who are working in different organizations in different industries. There are a total 30 of respondents from the first group and 100 respondents from the second group going to answer the survey questionnaires. The reason to select this group of respondents is because they have insight about why company performance is affected by internal and external factors.
The questionnaires are going to collect the demographic descriptive, opinion and judgment on the four factors that caused one firm underperformance. To collect the date, all the survey questionnaires are uploaded on www.surveymonkey.com, to allow the respondents to answer the question from their computer or mobile device.
The Likert scale approach is going to be used in the questionnaire, because it’s easy for the respondent to give their answer by choosing 1 from the 5. Likert scale is a five point rating scale to measure respondent’s attitudes, by allowing the respondents to express how much they agree or disagree with the question. For example, respondents are required to choose whether they agree, strongly agree, disagree, strongly disagree or neutral, the poor decision made by the leader may lead to undesired outcomes such as sales drop. SPSS is the software that is going to be used to calculate the research results, and provide the analysis work after all data is gathered from surveymokey.com.
4.0 Ethical Consideration
Due to the ethical concern that the answers of judgment and opinion provided by the respondents may affect their work, career, personal life, etc. Thus the respondent’s personal details such as name and home address are not required to provide during the survey. Some other information also remained confidential such as the company details of the respondents, will also not be disclosed in the final research paper. Informed consent may help to protect both parties while in the process of conducting the research, therefore, a writing form of informed consent will be provided to the respondents while sending the survey invitation.
Based on the finding evidence from the literature review, there are high possibilities that the four factors that suggested in this research are the main reasons to cause business underperformance. Therefore, the expected results of this research may be close to the expected outcome, which is proven that these four factors are the main concerns of business underperformance or business failure. Thus the leader in the organization, the marketing director, the product development director and the human resources director are the persons who have the responsibility to prevent business underperformance.
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