External Environmental Analysis 1 Case Study

RIM: Blackberry Phones External Environmental Analysis in UAE

External Environmental Analysis 2 Case Study

Objective To study, analyse and understand how various environmental factors can be a hurdle or an opportunity to the growth of a worldwide product and service in one particular region or country. To study and analyse the importance of the external environmental factors especially those which are cultural, political, social and technical in nature.

Case Study: Introduction Blackberry Phones are products that are widely used all over the world. The famous Blackberry to Blackberry messenger (B2B) has been one of the strongest USP of Blackberry and has led to its exponential growth in less than 10 years. The service that allows the flow of direct and instant messages from one Blackberry, hence records and data of such messages is collated in one centre and cannot be accessed by most countries. This led to the ban of some the features of Blackberry especially in Gulf Countries like UAE. The ban led to an instant drop in the sales of Blackberry in the Middle East region. Middle East countries are highly conservative with the government following mostly a traditional approach. Our aim is to study such external environmental factors that led to the drop of sales in Blackerry phones in the Middle East Region during 2008-2009.

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About Blackberry

Blackberry Phones is a product by one of the worlds most leading designer, manufacturer and marketer of innovative wireless solutions Research in Motion (RIM). RIM is a leading company for worldwide mobile communications market. Blackberry Phones is one of the most raving products in the world today and consists of smartphones integrated with softwares that enable access to a variety of data and communication services. From email to instant messaging to internet to multimedia solutions, all in one phone; the Blackberry solution supports leading enterprise email platforms and can be customized to meet the needs of one person or an entire enterprise. (Blackberry Official Website http://in.blackberry.com/ataglance/ ). The Blackberry phones have been one of the most outstanding products to be delivered by RIM. Currently Blackberry has four models mainly Blackberry Pearl, Blackberry Curve, Blackberry Bold 9000 and Blackberry Torch. The sales figure for last year display such an exponential growth that the share price of RIM shooted up by almost 23 percent. The sales hit a record of 7.8 million in the year 2009 with revenue of 3.46 billion in 2009. (Dilger, 2nd April 2009) http://www.roughlydrafted.com/2009/04/02/rim-shares-surge-as-blackberrysales-hit-record-78-million/

Blackberry: The Product The main USP of every Blackberry phone is the Blackberry to Blackberry instant messenger services. Apart from this, Blackberry also allows instant messaging on various applications like gmail chat, msn chat. It allows access to various social networking sites like Facebook, Orkut etc. The Blackberry phones also allows one to view heavy files that can be easily downloaded and also upload heavy files. It has ample storage space and various other entertaining applications. The Blackberry to Blackberry instant messenger services has been one of the key selling points and has created rave in the North American Continent. The Blackberry Curve is especially famous in the Asian Countries. Most countries where an interactive culture is

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strong prefer Blackberry Phones for day to day messaging. Blackberry to Blackberry instant messenger have found a lot of popularity among American and Asian countries. In Asian countries, people have larger families and socializing is quite popular, hence a Blackberry messenger service lets them interact anywhere and anytime in the world. This feature has created quite a rippling effect. Blackberry is a quality product that allows one to interact, email and work on the move.

About RIM Research in Motion was founded by two young engineering students who developed the first wireless data technology. The company was started in 1984 in Waterloo and became the first company to develop various wireless application mainly radio modems and the first two way messaging pager. (Richter Oct 14, 2009) http://www.brighthub.com/office/collaboration/articles/8041.aspx In 1999, Blackberrys wireless applications was revolutionary for corporates and business men who travelled and wanted to explore trading at convenience. It was like having a computer in your hand and a simple mobile helped them send and receive e-mails and carry transactions. InfoWorld Magazine awarded Blackberry their Product of the year award for the year 2000. (Richter Oct 14, 2009) (http://www.brighthub.com/office/collaboration/articles/8041.aspx By 2006, Blackberry boasted over 5 million worldwide subscribers and that number tripped to 15 million in mid-2008 (BBC Networks) http://www.bbc.co.uk/news/world-middle-east10830485 RIM became a publicly traded company on the Toronto Stock Exchange (TSE : RIM) in 1997 and got listed at the NASDAQ in 1999. (Halvey Feb 12 2009) (http://www.berryreview.com/2009/02/12/the-history-of-rim-the-blackberry-smartphonepart-1-the-origins/ BlackBerry - The Macro Economic Environment The world of electronic and communication devices has witnessed a drastic change in a very short span of ten years. Wireless phones started their journey only in the 1990s and the environment and growth has changed to an extent where it is possible to do video calling on

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phones too. From integrated 3G enabled phones to touch screens, mobiles have witnessed a series of radical changes all in a short span of time. Blackberry Phones have managed to find a stabilized environment around a highly impenetrable and challenging environment. The major environmental factor was certainly technological however; there are some social and political factors that have also been a hurdle in the growth of Blackberry Phones. A comprehensive study on the external environmental factors on Blackberry in UAE especially Dubai will give us a clear understanding of how certain environmental factors dominate the market as well as the future of a particular organization.

An Understanding of the Market in UAE To get a clear understanding of the various implications that affected an organization, it is important to know the market which is in focus. United Arab of Emirates (UAE) is situated in the south east of the Arabian Peninsula in the Southwest of Asia on the Persian Gulf. AbuDhabi is the capital of UAE, however Dubai is also considered as its commercial and cultural capital. The GDP growth of UAE as in 2007 is 198.7 billion.The major dominating industries in UAE are natural resources oil and natural gas and petroleum. UAE is largely a desert with oil mines; hence, it is hot mostly throughout the year. However, it has numerous malls, entertainment centres that make it a vibrant and lively country to live in. UAE is also a Muslim country with almost 96% of the population following Islam and the official language is Arabic. However, of the total 6 million residents, less than 20% are Emirati, more than half of South Asian and a significant number are from Europe and North Africa. Administratively, the UAE has a united as well as a diversified federation with each emirate having its own ruler and rights over the mineral reserves. There are no political parties since every ruler holds power on the basis of their dynastic position. UAE follows a very conservative culture and has certain strict policies and regulations. (UAE Information http://www.state.gov/r/pa/ei/bgn/5444.htm)

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External Business Environment Factor 1 Political Environment As discussed before, Blackberry Phones have dominated majority of the market due to its key features like Blackberry to Blackberry instant messaging and other facilities like e-mails and internet browsing. However, the very key feature led to serious implications in UAE in 2007. On the 1st of August ,two gulf states announced a ban on some of the functions of the Blackberry Mobile Phone, claiming security concerns The report further said that Saudi Arabia is to prevent use of Blackberry to Black berry instant messaging services since there is no way to monitor such communication. This is because the blackberry handset sets the encrypted data to computer servers outside the countries, hence, it is difficult to study or keep a tap on any communication. (BBC UK, 1 Aug 2010) http://www.bbc.co.uk/news/worldmiddle-east-10830485 Here we can clearly view a political environmental change that has influenced the overall market for RIM and Blackberry in particular. Since the regulation clearly conveys that Blackberry will be banned unless RIM makes an arrangement to release data from the users communication device will be made. The step was taken in the judicial, social and national security concern of the Nation. There were many other countries like India, Indonesia which eventually raised a doubt of exploitation by militants through such applications. Unlike other countries which are mostly democratic, UAE is still an autocratic country which means a ban is universally applied throughout the country. The controversial ban has taken an immediate effect throughout the country leading to reduction in sales of Blackberry phones in UAE. Here, the political influence has attacked the very key feature of a product which has weakened the products value in the market. What is to be noted is that the political influence has led to its downfall directly as well as indirectly. This means that not only can the consumer not reach the full-fledged product but even the retailers and wholesalers will suffer losses due to such ban. Hence, the political influence is affecting the consumer market as well as the distribution network. The demand will be much lesser since the product is now as mundane as every other phone. There is no Unique Selling Point that makes it stand out from the other products available in the market.

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UAEs ban on Blackberry features is a clear example of how countrys culture and political influence can be a strong external environmental factor that is detrimental to the growth of a product in a particular region. Such an influence also leads to the fall in the products value as well as the brand value. Countrys Analysis, Competiveness and Culture: The Countrys detailed analysis above gives us a clear picture of the political system of UAE. The political system in return is influenced by the social and culture of a country. UAE is mainly a Muslim dominated country where religion is the closest to the peoples hearts and is the tribal society is the essential reason for its conservative social structure. (Allo Expat) http://www.dubai.alloexpat.com/dubai_information/culture_dubai.php?page=0%2C0 The people of UAE have very strong religious and family values which have been followed for generations . Predominately, a conservative culture, there are strict rules and regulations followed especially for the safety of women, children and the citizens of UAE. Alcohol consumption, public smoking, kissing in public, strict dress codes in public are some of the other bans that are followed in UAE. (Offshore , 12th May,2010) (http://www.shelteroffshore.com/index.php/living/more/living-in-dubai-knowing-the-rules10831) Hence, it is clear that UAE gives the highest value to cultural and religious values and the safety and security of its citizens. The political system is also governed by such values. This socio- cultural environment of UAE is one of the major factors that led to the ban of Blackberry Messenger services. Consumer Lifestyle UAE per capita income is US $ 36,537 which is second highest in GCC and on number 15th in the world. With such a high GDP growth, it can be said that the people live an above average lifestyle here which means that the competition from other products is high. It is also worth noting that UAE also has the highest average online shopping spend in Asia Pacific,Missle East and Africa Region . Internet and mobile penetration is one of the most promising in the region. (Saeed, 29th April,2010, http://asaeed.wordpress.com/2010/04/29/consumer-insight-purchase-habits-of-uae-consumer/ ) This only increases the importance of a unique selling point which would differentiate Blackberry phones from other products.

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Quality products with unique features attract people here who lead a busy yet cosmopolitan lifestyle. Communication devices like mobiles and other gadgets are lifestyle enhancers for the people of UAE. It should be noted that the people here have a fascination for gadgets like cars, laptops and mobiles. In brief, the people are well educated about technological specifications and features here. Luxury products with finesse and quality are also highly appreciated and luxury lifestyle is considered as a way of life. Hence, the consumer lifestyle denotes an ability to adapt to changing products which means unavailability of the features is likely to change the consumers mind to a better equipped product very easily. After Effects of Blackberry Email, Internet and B2B Ban on RIM There are an estimated 5, 00, 00 Blackberry users in the UAE and 4, 00,000 in Saudi Arabia (BBC,UK, 1st Aug, 2010) http://www.bbc.co.uk/news/world-middle-east-10830485 ) ,However, with the ban there is a threat that most users would switch to products and services like iPhone that offer a variety of features. Hence it can be said that the competitors will take advantage of the technological set back to increase their productivity and increase their network.

Blackberry and RIMs brand value will also be noticeably hampered with media discussions on the subject. A need for social responsibility has been one of the key reasons for this ban degrading the brand value of Blackberry and RIM.

Technological Environment and Advancement The study clearly implies a rich and thriving market that has a strong desire for lifestyle enhancing products. Hence, another external environmental factor that threatens the growth of RIM and Blackberry phones in UAE is the updated and technically high end products. With the 3G phenomena seeping in, Apples iPhones will soon be dominating the market. The main feature of Apples iPhone is that it enables video calling on phone. Some of the other features include in built movie maker, access to e-mails and internet and ability to read books etc.(Apple, About iPhone 4, http://www.apple.com/iphone/ ) Apples iPhone is considered to technologically revolutionize the world especially the 3G world. Such high end product is a possible threat for Blackberry products and RIM.

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Since Blackberry enabled users to do instant messaging, video calling would certainly be one step above. However, most Blackberry phones are 3G enabled; however, this only enables the consumer to use some of the 3G services. Apples iPhone can be called as a phone designed especially for the 3G user, hence, the quality and the finesse of the product is simply incomparable. Apples iPhone 4 s entry into the UAE market and the world over will shift the focus from the Blackberry products. Since UAE is not populous, it is certainly a rich country that will adapt to newer technology faster than developing countries. Hence, the price factor does not affect the consumer in UAE. Most consumers think of lifestyle as luxury hence spend lavishly with pride. Hence, the high price factor will only enhance the value of iPhone in a market like UAE. iPhones success in the UAE market is certainly anticipated. The Launch of iPhone is classic case of new and updated technology slowly depreciating the value of the existing products. The technological environment affects the price and value of an electronic product by almost half the margin. Technology is one of the main factors that eventually lead to the diminishing lifecycle of an electronic gadget. With technological advancement taking place almost every day, Blackberry phones have managed to find a niche place in the market for a surprisingly long time. However, with 3G enabled phones like iPhone 4, Android, Blackberry and RIM will have to find a way to reinvent itself on a technical platform.

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Bibliography/ Cited References

1)Blackberry Official Website http://in.blackberry.com/ataglance/ ). 2)Daniel Eran Dilger, RIM shares surge as BlackBerry sales hit record 7.8 million 2nd April 2009 http://www.roughlydrafted.com/2009/04/02/rim-shares-surge-asblackberry-sales-hit-record-78-million/ 3)Linda Richter, A Brief History of the Blackberry, Oct 14, 2009 http://www.brighthub.com/office/collaboration/articles/8041.aspx 4)BBC Networks, Two Gulf States to Ban some Blackberry Functions, http://www.bbc.co.uk/news/world-middle-east-10830485 5)Ronan Halvey, The History of RIM and Blackberry Smart Phone Part 1, Feb 12 2009 (http://www.berryreview.com/2009/02/12/the-history-of-rim-the-blackberry-smartphonepart-1-the-origins/ 6)UAE Information, Information on UAE , http://www.state.gov/r/pa/ei/bgn/5444.htm) 7)BBC UK, Two Gulf States to Ban some Blackberry Functions, 1 Aug 2010, http://www.bbc.co.uk/news/world-middle-east-10830485 8)Shelter Offshore, Living in Dubai and Knowing the Rules, 12th May, 2010 http://www.shelteroffshore.com/index.php/living/more/living-in-dubai-knowing-the-rules10831 9)Ayesha Saeed, Consumer insight: Purchase habits of UAE, 29th April ,2010, http://asaeed.wordpress.com/2010/04/29/consumer-insight-purchase-habits-of-uae-consumer/ 10)BBC UK, Two Gulf States to Ban some Blackberry Functions ,1 Aug 2010, http://www.bbc.co.uk/news/world-middle-east-10830485 11)Apple, About iPhone 4, http://www.apple.com/iphone/

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