Is Rim Destined to Eventually Fail - Essay Example

? Is RIM destined to eventually fail? Macro & Micro economics A company Research In Motion is said to be destined to fail if it cannot provide products required, that is, mobile phones. Research In Motion provides services and products that mainly depend on the relevance to the current market needs (Chopra & Meindl, 2001). It means that if the taste and preference of the customers shift from a product, the demand for it also diminishes (Klein, 2003). Our research aims to find out whether RIM is on the verge of collapsing or not. Our argument is based on four economic factors that can explain whether it is likely to collapse or not. The factors can still support the argument otherwise. As a manufacturer of the Blackberry phones and products, RIM has shown a significant growth record in the recent past. The growth is witnessed in terms of output, staffing and the manufacturing infrastructure. The consistent increase in volume of the company’s products ensures its competitiveness in the marketplace by confirming that the products it supplies are market-friendly and adequate to the ever-increasing number of customers. The increase in production is fueled by the adequacy of staff. Adequate staff ensures that work is concluded on time, hence, meeting the company deadlines. Manufacturing infrastructure, on the other hand, facilitates invention and innovation resulting in originality of the company products (Palmatier & Crum, 2003). Externally, there is the ever-rising pressure from the rapidly expanding consumer base; RIM products experience a short lifecycle. Therefore, they have extended manufacturing contracts to likeminded firms to help them in production to meet the ever-rising customer demands. This has extended the decision making chain resulting in complexity when it comes to market efficiency and decision-making in terms of enhancing supply chains. The software makeup of the organization is also not up to the task, prompting the implementation of a decision support system for the company to ensure it continues its operations successfully (Chopra & Meindl, 2001). In the recent past, RIM has been quite successful and because of this success, a crop of challenges has come up threatening the success of the corporation. The company introduced seven new models of their products within the last 18 months. The challenge with these products is their shortened lifecycle that has reduced further from 2 years to a mere 1 year. Reports show that the company’s product portfolio has become very complex ranging from 18 to 100 possible end combinations of the models with only seven lines of products. This has the challenge of easily creating what we call an excess inventory calling for an appropriate plan. Such are the introductions of the product lines without which the overall costs of the firm would rapidly escalate cutting down on profits resulting in reduced returns (Palmatier & Crum, 2003). The growth of the output of the handheld phones invented and launched within the last two years has risen by 310%. This has presented a challenge of keeping up with such growth as the supply chains have risen from just one to six suites worldwide (Klein, 2003). The ramp rates are also severe as they are executed from multiple manufacturing points within different countries. Therefore, RIM through its management has to be extra careful on how it introduces its products to the customer base that is wide both in size and in the expectation. Decision-making has become increasingly difficult in the ever-rising complex environment. As a result, the corporation has lost track of which products to produce, at what time and to which audience (Chopra & Meindl, 2001). This is despite the fact that the decisions made at the head office cuts across all the supply chains making the company to always honor its commitment to its clients. A company is able to succeed if it is in the position of responding appropriately to the demand of its staff. In addition, there would be a delay in the production due to reduced work forces in case of high staff turnover; this would translate into a shortage of the product provision to the prospective customers (Klein, 2003). The sales by the company will, as a result, fall with a wide margin. Stiff competition also plays a role; the bitter rivals in the market, like Microsoft, get space due to the challenges to derail the performance of RIM. These competitors will realize the laxity by RIM and determine the customer taste and preferences; they are likely to produce products for each age bracket in the society widening their margin of sales. The market share of competitors will increase while that of RIM is decreasing (Chopra & Meindl, 2001). Due to the competition posed by competitors, products like Google’s Android phone have cut into the profits of RIM as the demand for Blackberry falls. This resulted in RIM’s worldwide sales slashed by 6%, from 20% down to 14%. On the other hand, Androids’ sales tripled from 11% to 33% within the same timeframe (Henderson, 2008). The company’s top management has a series of strategies to help reduce the challenges that threaten the collapse of RIM to a manageable level (Mentzer, 2001). The strategies range from environment’s sensitivity to customer management issues and more. First, the company committed to ensuring that its operations adhere to both social and environmental responsibility. This is because the company is multinational and its operations through its supply chain reach many parts of the world with a diverse range of communities. Such communities have varied cultural endowment and business norms. The company is coerced to consider the existence of the various standards of employment and environmental performance. In addition, they have to respect them within their environments of operation and business relationships. These adherences are formulated under several rules, regulations and codes that are included in the RIM supplier code of conduct (Henderson, 2008). To ensure that the suppliers of RIM products conform to their supplier code of conduct, the company uses the Risk-based approach to evaluate the supplier’s social and environmental responsibility. RIM also employs labor recruitment strategies like the freely chosen employment in all their supply chains without supporting labor injustices like the slave labor, forced or child labor. It builds the capacity of the recruited labor through trainings and frequent seminars. To enhance their supplies and improve sales, RIM launched a program called the RIM supplier diversity that works to create mutually beneficial business among the parties. It is the communities of their operations who are their target market, hence, the need for appealing products lest the sales dwindle (Mentzer, 2001). RIM faces a possibility of collapse if it does not handle the four key challenges of volume, variation, velocity and volatility as identified (Henderson, 2008). The volume of the Blackberry products has significantly increased calling for the need for effective management. From the RIM original offering, its product lines have significantly increased offering 19 different Blackberry products; it has to differentiate its market of operations. The approach to manage the lifecycle should be embraced through proactive and collaborative approach enabling the satisfaction of customer expectations while avoiding excess supply. The demand management process has been highly variable due to the volatility in demand and price fluctuations hence high variability (Mentzer, 2001). It is, therefore, clear that RIM is not collapsing any time soon. This is due to the institution of measures like the rapid response strategies by the company towards demand and supply planning. Under this program, there are calls for a consolidation of demand before building a supply plan that meets the set demand (Mentzer, 2001). Through rapidly stimulated supply, the company will be in the position of getting the best choice of the existing demand and supply options. In understanding the customer demand, the company is encouraging the connectivity of customer data that provide a more interactive approach with the customers. Resulting is a better collaboration with the customer giving a clearer picture of demand. In addition, the company is planning to employ even more special rapid response activities to help analyze the market. It is important to differentiate the market geographically, most so after RIM realized that it could still make billions of dollars outside the United States. Therefore, the corporation should maximize operations outside the US as the competitors concentrate on the US (Palmatier & Crum, 2003). RIM is also able to learn from its competitors, like Apple, the need to diversify its products to maximize revenue. RIM is as a result trying up and down to make Blackberry 10 a success though facing stiff competition from competitors who have an established strategy. Therefore, RIM should devise a mechanism to reestablish consumer confidence. References List Chopra, S., & Meindl, P. (2001). Supply chain management: Strategy, planning, and operation. Upper Saddle River, N.J.: Prentice Hall. Henderson, H. D. (2008). Supply and demand. Chicago: University of Chicago Press. Klein, L. R. (2003). The economics of supply and demand. Baltimore, Md.: Johns Hopkins University Press. Mentzer, J. T. (2001). Supply chain management. Thousand Oaks, Calif: Sage Publications. Palmatier, G. E., & Crum, C. (2003). Enterprise sales and operations planning synchronizing demand, supply and resources for peak performance. Boca Raton, Fla: J. Ross Pub. Read More