Analysis of the Mobile Industry Environment - Essay Example

MOBILE INDUSTRY ENVIRONMENT USING THE PESTEL ANALYSIS. A CASE STUDY OF BLACKBERRY A Micro and Macro Analysis of the Mobile Industry Environment Using the Pestel Analysis. A Case Study of Blackberry Introduction Blackberry is one of the multinational electronic product suppliers in the world that has managed to dominate the mobile industry market for a long time now in the history of the mobile industry. The organization is a major supplier of wireless devices including mobile phones and pagers and currently working on the launch of more products. Commonly known as Research in Motion, the company started in 1984 and took the world by storm in 1999 with the introduction of blackberry solutions. It continued to produce advanced models of blackberry solutions while partnering with technological and telecommunication companies such as MTN, Yahoo, AOL among others. Blackberry has proved a superior communication device especially during the 9/11 crisis, in which it was able to send messages where other devices had failed. In addition, during the anthrax scare, blackberry also emerged a superior means of wireless communication, and the two incidences earned it a reputation for security and reliability. BlackBerry recorded a revenue of $18.435 billion and profit of $ 1.164 billion in 2012. The company’s main competitors are Google Inc., Nokia OYJ, Apple Inc., and Samsung Electronics Co., Ltd. However, the mobile industry environment has considerably changed, and the intensity of competition has greatly put the supplier at a lower bargaining end. As Husso (2011, p. 79) points out in his research, scholars have taken a keynote of the change in the dynamic mobile environment that has threatened to push most organizations out of the market. Despite the fact that the company is performing well financially, it is not immune to the pressures of external forces. Currently, most researchers have established that new market entrants, change of technology, and development of new government regulations have all heightened the competition. Consequently, the organization has engaged in research driven strategic management to react to the changes in the market force and to remain profitable in this industry. This research paper highlights external forces impact on BlackBerry through PESTEL analysis, which will provide insight into the factors affecting the company and the mobile industry at large (Johnson et al 2008). The result of the analysis will then help in formulating a development and management strategy that would give thrust to Blackberry and propel it to a competitive position. Objectives of the research Highlight the external forces that impact BlackBerry and the entire mobile phone industry using PESTEL analysis. Determine factors that affect the operations of mobile phone companies Create an effective development and management strategies that would drive BlackBerry to competitive position in the mobile phone market. Predict future changes in technology among other areas that would impact the mobile phone industry. Literature Review The mobile industry is one of the market environments that have garnered a wide range of research from scholars across the world. Ryan (2006, p. 45) expressed the competition that exists within the mobile industry and recommended that all mobile industries switch to modest business strategies to survive in the competitive market. This scholar pointed out that competition has reduced the cost mobile products so much that business priced-market strategies have become obsolete in this market. The research of Ryan has been followed by numerous researches seeking to evaluate various aspects of the mobile industry environment. Researchers such as Kim (2004, p. 23-42) and Tallberg (2007, p. 654) have paid particular attention to the mobile handset market and the competition that has emerged in the recent past. The two researchers reached the conclusion that new market entrants and the development of new mobile products have put mobile supplier in a bad bargaining position. The recommendation of these authors is that organizations adopt better differentiation strategies and redefine their business with more supply chain management strategies to roll out their products in the market. More research has focussed on the increase in the number of mobile service providers that have resulted from the increase in the number of wireless devices hence necessitating more service (Fernández & Usero, 2009, p. 339-347). More recent research by Husso (2011, P. 2-12) focused on Nokia, one of the dominant sellers of handheld devices, and came up with a conclusion that both the macro and the micro environmental factors had changed considerably, and the organization had to shift to new business strategies. Although a wide range of research has been conducted, there seems to be a research gap as far as the mobile handset industry is concerned. Most research seems to have been diverted to the mobile operator sector and those that have seen scanned the handset mobile environment has only captured a few elements of the market environment (Husso, 2011, Pp. 3-4). This research intends to use the PESTEL model to scan the macro-environment with regard to case study of BlackBerry. The PESTEL model covers the Political, the Economic, Social, Technological, Environmental and Legal aspects of the environment which are macro-environment elements (Rothaermel, 2012, pp. 56-61). With this rigorous market scanning, this research will provide effective recommendations to help Blackberry remain competitive in this market environment. Macro Environment Analysis Political The mobile phone industry has mostly flourished due to warm political climate in most countries. Moreover, political parties use these mobile phones to target voters directly through video advertisements and messages sent via the internet. Economic Intelligence Unit (2012) revealed that 83% of Americans who owned a tablet or smartphone registered to vote mostly due to the new gimmick referred to as “m-campaigning”. Such style of campaigning was seen during the recent US elections whereby both Mitt Romney and President Barack Obama used the medium for their campaigns. Economic Intelligence Unit (2012) notes, “Thanks to location-tracking, potential supporters may receive an automated message urging them to drop in just as they are passing a voter-registration office, or to turn up to a nearby rally”. Another key political figure who utilized mobile phone for campaigns especially smartphones was Former French President Nicholas Sarkozy. In his re-election bid, he set up a twitter account to help him with the campaigns. This reveals just how wide the mobile phone use has become common among the politicians. According to Economic Intelligence Unit (2012), this presents a potential for the mobile phone companies, in which they can use the strength as a bargaining with potential political parties to create built in apps in the phones that could aid in campaign matters. Likewise, there is a friendly political climate in USA and North America, and this has helped in the success of the smartphone industry particularly BlackBerry. Nielsen (2010) projected that smartphone users would overtake feature phone users come 2011, and looking at the trend current, this is what has happened. However, Research in Motion or BlackBerry has experienced challenges in several countries including China, UAE and India because of concerns over the security feature provided by the blackberry device. According to BBC (2010), this presents difficulties to the government authorities as they are not able to monitor the devices. Following the above concern, blackberry devices have also received scrutiny in countries such as Kuwait, Egypt, Indonesia, and Saudi Arabia. BlackBerry and the mobile industry as a whole also face tough times in the European Union political environment particularly countries such as Germany and UK, who have imposed strict regulations regarding safety standards and hygiene for manufactures. These may impact negatively on the company because of pressure of energy usage, toxic contents and recycling issues (Farrar, 2009). Finally, in Africa also the mobile phone industry is largely affected by politics due to political instability of several African countries. Nevertheless, this situation has changed over the years with a number of free and partially free countries rising from 3 and 10 to 11 and 34 respectively. This shows a lucrative opportunity for the mobile phone industry from a political point of view. Economic The economic factors that impact the demand of smartphones among other mobile phone devices include consumer income. This makes the demand elastic such that when the economic income is high, the demand for mobile phones also becomes high and vice versa. Thus, the recent economic downturn shows that the consumer income is less, and consumers are not willing to spend on luxury products, unless the price is fair, and the products offer promised value. Nevertheless, the smartphone industry promises steady growth especially with the developing economies such as India, Latin America and China providing a platform for BlackBerry to enhance its operations and sales in these regions (Economic Times 2009). Another economic factor is the exchange rate since blackberry sales are done throughout the world. There is bound to be fluctuations in exchange rates that will either make the company prohibitively expensive, or competitive. The exchange rate fluctuations presents profound impacts on blackberry mostly in price sensitive markets such as China and India. RIM (2009) states that the exchange rates in different countries directly affect the realized return on investment portfolio with overseas holdings. Social Looking at the social environment, the demand pattern is impacted by factors such as education, income levels and lifestyle. In addition, cultural aspects also play a key role on sales, for example, in America, the holiday period of November to December seem to be the best period for sale of electronics including blackberry. According to Jaroslovovsky (2010), another socio-cultural factor that impact sale of blackberry is the usage of the product by antisocial elements. This impact on the brand image whereby consumer markets in sensitive countries may interpret the product as part of anti-social element. Similarly, business markets may also reject the products due to strict government regulations regarding usage of blackberry by anti-social elements; thus, this will hamper the performance of the product. Technological The smartphone customer base require new and vigorous features in the products, and this is a major technological factor affecting blackberry and the entire mobile industry. This industry has seen several and rapid advancement most remarkably the 3G technology, which has had a great impact on RIM. Moreover, there is fierce competition in this industry especially on software offerings; thus, to stay on the competitive edge, RIM must ensure constant development of new and unique software for its devices. However, the company has an advantage because the blackberry smartphones are adaptable to several technological changes since it can be used with various services such as GSM/GPRS/EDGE, HSPA/UMTS, CDMA/Ev-DO, and iDEN (RIM 2009). Environmental Environmental factors dictate that companies must comply with given environmental standards especially with regard to manufacturing. Any mishap that leads to practice that are not eco-friendly in this environmental conscious world may lead tarnished image and reputation of the company. A look at RIM shows that the company has maintained eco-friendly manufacturing standards over the years of its operations. According to BBC (2010), examples of environmental factors that may impact on the manufacturing practices of the company include energy usage, product recycling, and wastage released during manufacturing. Legal The last aspect of PESTEL analysis is the legal environment and how it affects blackberry and the entire mobile industry. One major legal issue is that the company offer fairly secure services making it hard for the authorities in countries such as India and UAE to monitor the services. Therefore, if the countries decide to ban services offered by blackberry, it could create a huge impact on the company’s operations. BBC (2010) also notes that blackberry is facing several legal battles with companies such as motorlaetc, visto among others that have brought implications on the company. In addition, Minerva Industries also filed complaints against blackberry in 2007 and 2008 alleging infringement of its patent. Furthermore, MSTG also filed a patent infringement lawsuit against RIM in December 2008 BBC 2010). Moreover, another infringement of patents lawsuit was filed against RIM in March 2010 by the PACid Group and 30 other defendants (BBC 2010). All these legal issues present huge impacts on the performance of the company, as well as result in tarnished reputation and expensive settlements. Research Methodology My research methodology will entail gathering relevant information and data from several sources, compiling, analysing and evaluating these to determine the environmental factors that impact the mobile phone industry. In addition, this information will be used to give an insight into the steps that BlackBerry can take to enhance their performance and attain a larger market share than they currently command in the mobile industry. This study will involve descriptive qualitative research, which means that the major data collection means will be through observation. This involves examining the market situation of the mobile phone industry, observing data from several sources, recording down and analysing the data collected. Thus, the data collection will mostly involve human responses and observations. Thus, the methodology will entail interviews, publication research, surveys, action research, focus group, and selective observation of events. Data collection methods and tools will involve sampling, random sampling to be specific, and structured data collection instruments, as well as direct interaction with the interviewees on one to one basis or in a group setting. The research applicants will include people working in the mobile phone industry especially the managers and CEOs, ordinary workers, and consumers of smartphones including the government and corporate consumers of BlackBerry devices. The procedure of data collection will involve collection of primary data, which will be interviews, and then secondary data entailing publication research, surveys, and action research. Ethical Considerations This research will employ several ethical principles to ensure that the rights of the participants and the companies under evaluation are not violated. As such, some of the ethical issues that will be considered include being honest, fair and not causing harm to the participants. In addition, informed consent will also play a key role in data collection whereby the participants will be presented with informed consent in order to ensure that they participate voluntarily with knowledge of all the benefits and risks involved. Other ethical issues that will be considered include privacy of the BlackBerry company records, as well as issues dealing with deception. Conclusion The mobile industry is rapidly changing with a rigorous introduction of new devices, features and apps. This gives companies pressure to be on toes and keep up with the changing industry. Thus, a company such as BlackBerry require an effective management and operational strategy to maintain competitive advantage in the rapidly changing environment. However, developing such a strategy requires extensive analysis of the micro and macro environment, and then use the information to develop a working and profitable strategy. This research proposal contains PESTEL and SWOT analysis of mobile phone industry with reference to BlackBerry. The analysis shows several factors that impact on the performance of the company, as well as opportunities that it can utilize to enhance its operations and maintain its position in the market while increasing its market share. Bibliography AfricaGoodNews.com BBC. 2010. News-Technology. Accessed 15 December, 2013 from www.bbc.co.uk. Economic Intelligence Unit, 2012. Mobile Telecommunications: BlackBerry. Accessed on 15 December, 2013 from http://www.eiu.com/ Economic Times. 2009. News. Accessed 15 December, 2013 from www.economictimes.com. Farrar J., 2009. From Blackberry to Greenberry: RIM Goes Green at CeBIT. Business source premier Fernández, Z. and Usero, B., 2009. Competitive behavior in the European mobile Telecommunications industry: Pioneers vs. followers, Telecommunications Policy, 33, (7), Pp. 339-347. Husso, M., 2011. Analysis of Competition in the Mobile Phone Markets of the United slopes and Europe. Available through :< http://epub.lib.aalto.fi/en/ethesis/pdf/12638/hse_ ethesis_12638.pdf> Jaroslovsky, R., 2010. Bloomber. Business Week. Issue 4192 Nielson, W., 2010. Smartphones to Overtake Feature Phones in US by 2011. Accessed 15 December, 2013 from http://blog.nielson.com Kim, J., 2004. Mobile handset subsidy policy in Korea: Historical analysis and evaluation. Telecommunications Policy, 28(1), Pp. 23-42. RIM, 2010. Our Company. 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