The purpose of this research is to analyse the case of Nokia and Blackberry that will lead to the identification of the cause behind the failure occurred. Both the companies were once the market leaders in telecommunication industry, whose fall can be attributed to the strategic failure of the company. The strategic approach and decisions taken by the manager of an organisation for attaining greater performance and competitive advantage of the organisation is cumulatively referred as strategic management. This helps identifying and describing the strategies incorporated in the process. As defined by many, the importance of strategic management lies within the formulation of business structure that assigns and reassigns the business resources for attaining the goals and objectives of the organisation. The process involves various management concepts that include objective selection, environmental analysis, internal organisational analysis, evaluation of strategies, risk assessment, marketing and any other strategies utilised in the business process. Various determinants such as organisational structure, culture, skills and competencies of an employee are important and plays active role in influencing the overall strategy of the organisation towards the attainment of the objective. Strategic management serves many benefits other than just the attainment of goal. These are financial benefits, guide to organisational activities, competitive advantage, risk management and optimal utilisation of resources.
The upper management of an organisation sets this overall strategy of the organisation accordingly. However, the origin of these strategies can be the sparked actions and ideas came from the lower management of the organisation. Despite of elaborative strategic management incorporated by different organisations according to their objective, organisations often fail in reaching the mark. Various reasons can be identified that lead the organisations in strategic failure. Some of the significant ones that are common in the case are unforeseen external circumstances, lack of understanding, and implementation of flawed strategy, misalignment of strategy, and organisational objective and competencies and lack of accountability.
This research focuses on the identification of the strategic issue faced by once a leading telecommunication organisations Blackberry and Nokia. It was a sure case of strategic failure, where the companies overestimated their brand value and ultimately led to the downfall of the organisations. This research aims to identify the strategic failure in the concerned companies that supplemented into the loss of market share. This paper further identifies the level of immunity developed by the current market leaders to similar fate. This research further focuses on the identification of issue and the methodology that will be incorporated for extracting desired results.
The mobile phone industry is dated back to the 1973 when Motorola first introduced a complete wireless device that took the telecommunication industry to a completely different level. The customers were first provided opportunity to carry the devices along with them in their workplace. However, the devices were not similar to the ones available in contemporary market and underwent various modifications through innovation brought by the product developers. Earlier mobile phones were only provided opportunity for making phone calls using the device. However, the phone used by the customers in modern generation does more than just a phone call and enable the customers to use it as computers as it connects the world of internet and perform various tasks. Hence, innovation in the industry had always been the primary criteria in ht industry. Increasing number of competitors entering the industry creates competitive atmosphere that forces the organisations to bring innovation to hold their position and lead in the market.
Nokia Company was founded in the year 1865 as a pulp mill and it was associated with the rubber and cable industry. However had shifted its focus in 1990s when it refocused its venture towards multinational communication, information technology and customer electronics company. It is considered as one of the major contributor in the industry and produced a range of products during 1990s and 2007 that helped them to lead the mobile phone industry. However, introduction of smartphones resulted into their fall in market share.
Blackberry on the other hand entered the market of telecommunication with its pagers that enabled the customers to receive text messages. Blackberry soon entered in the mobile phone industry with their innovative products that enabled the customer to explore more than just phone calls but also to use the facilities of emailing. The QWERTY styled keyboard also helped to grab attention of the customer in the process as it provided experience of computer in the mobile device.
Nokia developed its market basing on the quality hardware in their mobile devices. The company gained its popularity and market sharing during the mid 90s for reliability of their products. The products were so popular that the customers recognised the products from teh model number. However, failure in adapting innovation in brought market decline for the company. The company was focused on the Java based software for their mobile phones when Apple and Samsung already launched their smartphones in the market that allowed them to access the internet through their handsets.
Blackberry on the other hand increased their market share and captured their market by innovation, as they were the first to provide email service in their handsets. Moreover, the QWERTY keyboard in the mobile phones enabled the customers to experience the use of computer in their handsets. Decline of market share in case of Blackberry can be attributed to the same corporate strategic failure that failed to identify the need of innovative strategy. Android and ISO enabled the customer wider opportunity in their handsets where blackberry only offered email and BBM o their customers.
The research questions aims to provide in depth clarity of the issue faced by Blackberry and Nokia in their business process. The data extracted in the study and the results concluded will help the organisations in understanding the limitations in both the cases, which in turn will help them in revising their strategic planning accordingly to avoid similar issues that are likely to occur if similar circumstances are evidenced. The limitation of the strategic planning that will be evidenced through the research questions will indirectly communicate the strategies that are to be implemented for gaining competitive advantage by avoiding the risks identified through the research. The questions will further identify the affectivity of the strategic management adapted by the contemporary market leaders for holding competitive advantage in the market. Determination of the affectivity of the strategies incorporated by the market leaders will help forming idea of the necessary strategic planning required for long-term success. The identification of the steps involved in strategic planning of the contemporary market leaders will point out the process of formulating strategic plan effective in long-term success.
Hence, from the above stance, the research questions are important in the field of research and communicate the necessary information required for the organisations in formulating effective strategic plan.
Research methodology communicates the structure a research. This systematic process helps the researcher to conduct the research in a systematic manner. The readers can assume the type of research being conducted and the direction of the same from this particular chapter. This chapter of research communicates research philosophy and approach that will be helpful in this particular research. It will further communicate the necessary methods that will be utilised in both data collection and analysis for obtaining the desired outcome.
The primary philosophy in this research will be ontology that will help in interpretation of the factors involved. This will help understanding the reasons of failure took place in Blackberry and Nokia. The philosophy further will focus on the subjective stance, which will help understanding the actions that resulted into the failure. In other words, it will help knowing the social phenomenon and their meaning that have existence and independent of social actors. Ontology will be supported by the epistemology that deals with the sources of knowledge. Its primary concern lies with the possibilities, nature, sources and limitations of the knowledge in the field. This will require interpretivism that helps interpreting the elements of the study. Utilisation of interpretivism in the study will help interpreting the knowledge acquired from the secondary sources to conclude the findings.
Research approach communicates the direction of the research. It is possible to choose between deductive and inductive approach. The deductive approach is useful in validating the interpretation that can be made from the acquired data. Inductive approach on the other hand helps in formulating new conception from the data that has been acquired from the research. The necessary approach for this secondary research is the inductive approach that will help in understanding and concluding the reason facilitated in the failure and proposes the necessary strategy to overcome similar situations in the future. The inductive approach will further be supported with the deductive approach. It will help in validating the ascension made through the inductive approach in the research.
The data that are collected and utilised in the research are of two types that are primary and secondary. The research based on primary data is referred as primary research and the data are collected first-hand using either qualitative or quantitative method. However, the research method selected for this particular research is secondary. The secondary research uses data collected from the secondary sources. Secondary sources can have a wide range of variety that includes articles, journals, books, newspaper articles, blogs and many others. However, the authenticity of the data is of primary importance for attaining reliability. All the above will be used, while considering the reliability of the source. Analysis of the secondary data involves reviewing and interpretation of the data acquired from the sources. The conclusion in the secondary research is drawn upon the review and interpretation of the data.
As the failure of both Nokia and Blackberry is case of strategic failure, which resulted into loss of market share, the situation can be justified using the competitive strategic theory and competitive market analysis theories.
Porter’s Five Force
Porter’s five forces framework on the other hand helps understanding the attractiveness of the product and its profitability. There are five components in this framework that studies five different aspects of the market that are power of supplier, power of customers, competitive threat, threat of new entrants and the threat received from the substitute products. The case of Nokia and Blackberry falls under the last parameter. They failed to see though the future market threat and the need of the customers. Customers developed the need of something that serves more than just a phone that resulted in introduction of smartphones. Both the companies, even after the launch of smartphones continued with the outdated products providing limited features and opportunities for the customers. This was a competitive strategic failure where the companies failed to identify the threat of substitute products that could possibly replace their offerings in the market. Moreover, they failed to identify the threat on new entrants like Apple. Launch of Apple’s first IPhone was the first milestone in changing the customers’ perception towards their wireless phones. Hence, both the companies failed in competitive market analysis, which caused them to lose their market share due to introduction of more competitive products.
Competitive Advantage – Porter’s Generic Competitive Strategy
Porter’s generic competitive strategy identifies business strategy under two competitive positions that are cost leadership and differentiation. Companies using cost leadership strategy focuses on delivering high quality product in lower price. The product might be common in the market, but the company gain advantage through low costing and high product quality. Nokia implemented this strategy, which helped them in gaining competitive advantage in the market. However, the differentiation was neglected.
Blackberry on the other hand implemented differentiation strategy by introducing QWERTY phone in the market, which helped them enjoying premium pricing. Differentiation strategy proposes to deliver unique product in the market, which is different from other similar products available. The mobile phones delivered by Blackberry was unique as the phones provided more than just calling features to the customers and the customers could avail other services such as email, BBM etc. from their phones. Moreover, the QWERTY keypad provided customers the opportunity to experience computer like feeling in their mobile phones that increased the product value. However, both the strategy failed in due to the overuse and lack of adaptability with the contemporary change in market trend. The current market leader like Apple and Samsung on the other hand focuses more on differentiation strategy that drives them on innovation of their products to provide their customers opportunity for experiencing innovation. This also enables them to enjoy premium pricing for their products. Xiaomi, oppo etc. on the other hand have adopted cost leadership strategy that is helping them in increasing their market share. Moreover, they have incorporated differentiation strategy besides focusing on cost leadership strategy to provide their customers unique opportunity.
Strategic Analysis of Business Failure
Business Strategy Analysis
Understanding the value and the need for strategic plan remains as the great place to initiate. Implementing a strategic plan could take discipline and foresight. As put, forward many researches, the strategic management remains as the technique of describing the purpose as well as pursuit of a firm and the technique for achieving them. It is necessary for every organization in the corporate business sector to design strategies based on the current market environment. Nokia and Blackberry lagged behind the pace of innovation and development. Mane on the other hand have identified that it is necessary for the organization to look at its competitors’ actions and strategies. For example, after the launch of android, the large electronic giants like Samsung, LG, and some newly entered firms like Mi, Oppo have rapidly increased their market share by providing extended features with Smartphone but Nokia, and Blackberry remained with their existing Java-based operating system.
When the demands of android Smartphone were increasingly high, Nokia was busy with its hardware aspects. Nokia failed to identify the increasing the significance of software. In this context, it is possible to comment that when Apple and Samsung started dominating the market with their launch of Android, Nokia was earning profits from its existing mobile phone. Besides, Nokia, BlackBerry device were top in their standard for several years as they acquired the market with small QWERTY keyboards, which offered easy option to send emails and instant messages. Moreover, the people were more comfortable with the small plastic keys as well as the little scroll ball. However, like Nokia, BlackBerry also was also late to develop its future corporate strategy of developing the operating system. It is possible to defend the fact that Blackberry failed to observe the change of mind of customers. Each business industry observed a changing market scenario, where customers’ taste and preferences change on a frequent basis due to rapid development and innovation. It is always advisable to adapt to the recent trends to avoid the market risk. For example, even though BlackBerry tried to lure the customers with its BlackBerry 10, which provides full touch screen feature with more enhancing look and surface; however, by that time, it was late for the brand to seek market attention. This can be attributed to the late implementation of innovation strategy taken by the company. Annual report 2013 reflects the failure of generating revenue even with the launch of Blackberry 10.
Figure 1: Blackberry Revenue 2014
Source
On the other side, Nokia overestimated the strength of its brand as well as assumed that even if it was late to adopt the trend of Smartphone; it would be able to catch up swiftly. When Samsung entirely captured the Asian market with its extended android Smartphone, Nokia continued to focus on its core hardware design, which they thought to be wining over the users. Conversely, even if Nokia had stuck with its own operating system rather than embracing Windows Phone in 2011, the brand would have succeeded. Even though Nokia had become dominant brand of hardware, by 2010, the firm provided several disappointing cell phones with its chunky operating system. Failure of this strategy incorporated by the company can be supported with annual report 2014, which reflects a constant fall in net sell over the years.
Figure 2: Nokia Consolidated profit and Loss Accounts
Source
The above-presented facts indicate that both the brand made a significant strategic mistake, which led them to almost extinction. However, researches revealed that it is persuasive to put the blame on Apple, Samsung and Google for Nokia and BlackBerry’s demise but both the brand started to collapse from within before Samsung, Google, etc. entered the mobile communication sector. The study also revealed the fact that rapid market change as well as the growing complexity became a significant challenge for Nokia and BlackBerry. Nokia was not able to fulfil the needs of innovation but during the period of 1996 and 2000, the rapid growth of Nokia came at cost. Hence, the cost is that managers at Nokia’s major development found itself under increasing short-term performance pressure as well as they were unable to dedicate time as well as resource to innovation.
It is arguable that change and innovation are the two significant elements in the corporate business sector that remained inevitable. When Nokia’s existing mobile phones were earning a great amount of profits during 1999-2004, the firm should have thought about its next step based on changing consumer behaviour of that particular period. Company’s strategy focused on the delivering long lasting products, which helped them in increasing profit margin reflected in 2006 annual report.
Figure 3: Nokia Consolidated profit and Loss Accounts 2006
Source
This reflects increasing profit over the years and significant hike in the sales when compared to the previous years. However, the organization did not pay attention to its future strategies; instead, they were more involved in their existing corporate practice.
Blackberry reflected similar success in their strategic management during the contemporary period. Their QWERTY phone with easy email access gained customers’ attention and widely adopted. The strategy incorporated by the company was to improve their existing products for increasing brand loyalty and market share. Company’s annual report 2006 reflects constant growth of the net sales over the years.
Figure 4: Blackberry Consolidated profit and Loss Accounts 2006
Source
Thereafter, during the period 2005-2009, Nokia still had significant chance to adapt to the Smartphone trend, as though Apple entered the market with its revolutionary iPhone but this was not considered as a significant threat because the niche market of Smartphone users across world. Thereby, the first reason of Nokia’s failure was Samsung’s entry with its completely new repositioned mobile phones, which enabled the brand to penetrate market where Nokia was dominating. The strategies developed by Samsung with its world class Research and Development facility enabling them to work on its earlier weaknesses. Likewise, BlackBerry had gone through the same market situation; even though BlackBerry continue to launch its new version of mobile phones but the app economy revolved around android iOS and Android; as the consequence, even though who did want a BlackBerry were left without the fundamental service they required.
It is important for the marketers or the business to be aware of its value propositions or in other words, it explains why a brand’s product or services are the best choice for the target customers. This means if the brand does not have a strong value proposition, customers do not have proper reason to purchase anything from the brand they do not have a proper reason to buy the product from that particular brand. Both Nokia and BlackBerry have failed to keep this value proposition but on the other side, rival’s iPhones are often considered as the most prestigious, as people have many reasons to select Apple. Similarly, Android Phones of Samsung are often considered as the most versatile and this competitor develop the idea of being more user-friendly compared to other competitor Apple. Compared to these two electronic giants, Nokia’s mobile phones do not provide any particular unique feature. However, Nokia’s phone even though tried to generate an idea of superior phone camera but it was too late.
Just as Nokia, BlackBerry was lagging behind to keep its value proposition. The above-presented fact indicates that brand’s failure to keep up with Apple and Google was the consequence of mistakes in its strategy as well as vision. First, after being in a dominant corporate market, BlackBerry failed to predict that consumers would drive the revolution of Smartphone. Secondly, the firm was blindside by the presence of “App Economy”, which has driven the massive acceptance of iPhone as well as Android –based system. Likewise, the brand also failed to understand that Smartphone would evolve beyond mere communication devices to turn into a full-fledged cell-phone manufacturer. BlackBerry insisted on manufacturing phones with full keyboard by then the customer made it clear that they prefer touch screen, which allowed them to access video and touch screen navigation. Eventually, when BlackBerry launched a touch screen device, it was observed as the poor imitation of iPhone, which again indicates that product development strategy of the failed.
Unlike BlackBerry and Nokia, today’s current market leaders such as Samsung’s marketing is one of the most effective strategies ever created, as the strategy helped the firm to change its structure as well as become leading manufacturer of Smartphone device. As discussed above, because of the ever-changing tastes of customers in the technology sector, the organizations tend to follow the pace and develop progressive as well as enhancing gadget to their consumers. Likewise, Samsung prefers to change to obtain upper hand on the market; thereby, new marketing strategy of Samsung was developed as the key to evolution. Customers were never largely attached with certain technology products; rather they prefer to strive to gain the best. Thus, such situation enabled Samsung to develop evolving devices that could certainly satisfy the needs of the customers and the brand has never been failed in this context.
Moreover, the companies in like Samsung and Apple put focus on their Research and Development strategy for holding the competitive edge. This can be considered as the investigative approach of the companies. This is the activities conducted by the organisations for improving the existing products and procedures, which leads to the development of new products for satisfying the market need. In this matter, the particular department is responsible for analysis of the market data acquired and identifying the market need. This responsibility further extends to the innovation of new technologically advanced products aligning with he market demand and development of the same for satisfying the need. IPhone X is the result of the implementation of innovative strategy that enabled them to provide future generation features like face detection and OLED screen that helped them to hold the market share.
Figure 5: Fourth Quarter Report of Apple 2017
Source
This reflects raise in net sales after launching IPhone X in 2017. Nokia and Blackberry represented weak R&D approach in the closing end of their operations. The failure can possibly be attributed to the low investment of the company in the particular product that accelerated the situation. However, the investment and focus made by the current leaders in the particular segment of the business operation is noteworthy. The constant development of their products with the inclusion of new features in their devices can speak for the same.
These activities s identified in case of Samsung and IPhone contributes in the future strategic formulation of the companies. Future strategy is possible to conceive as the future planning of the strategic management of the company. This involves the risk assessment, strategic innovation and innovation in the product line aligning with the previous assessment. The Samsung Semiconductor or popularly known as the SSI established in the Silicon Valley is considered to be the gateway to the future. The company established the facility thirty years back, which enabled them to enjoy constant innovation and delivering the future products to their customers. Besides, the company have made full scale investment in their IoT or internet of things for supporting their few other strategies, which includes the cloud and data storage, personal information security, smart machine and smart health care.
Figure 6: Samsung Annual Report 2016
Source
This provides Samsung a competitive advantage in the market for holding their position in the market for significantly longer period. The figures reflected in the annual report supports the success of their strategy. Similarly, IPhone has incorporated their innovative business approach in delivering the next generation products supported by their intense networking and cloud facilities. These innovative strategies incorporated by these companies are likely to contribute in holding the market share.
Conclusion
The report from the secondary data identifies a clear gap in the business strategies incorporated by both Blackberry and Nokia in the changing global market. This can be considered as the clear case of strategic failure that contributed in the market dimension for both the company. There are very few to blame on the contemporary market leaders as they followed the flow in the trend and successfully adopted accordingly. There are many limitations found in case of Blackberry and Nokia in the report that limited their abilities for coping with the changing trend.
The first and foremost that can be concluded from the above is the overestimation of their brand value. The companies relied too much on their brand value and customer loyalty that resulted in the downfall of the companies. This can further be attributed to the failure of their strategic management that failed to foresee the forthcoming challenges in the market.
Moreover, Nokia put too much faith on their hardware during the rapid growth in the software that introduced android and iOS in the market. Despite of modifying to comparatively advanced engine, Nokia decided to stick to their java-powered handsets that are a clear sign of strategic miscalculation. Blackberry on the other hand tried to compete with their blackberry messengers with limited opportunities for the customers to explore. Both the organisations had their opportunity to invest in the R&D for both identifying and developing next generation products for competing in the changing market and satisfying the customer’s need with the rapidly growing technology.
Nokia had the chance to adapt to the modern generation product even after Apple entering the mobile market with their innovative product, as the products offered by the company were excessively expensive for the middle class customers to put their hands on. However, the company decided to remain stagnant with their traditionally used technology without considering for future investments. The fall of Nokia took place with the introduction of android that provided opportunity for the customers to explore world of possibilities for much cheaper price. This officially shifted customers focus.
However, the contemporary market leaders can be considered as holding much safer position with their innovative business strategy and adaptability. The current management of market leaders’ shows considerable degree of adaptability in their business strategy leaving them scope for constantly innovate and evolve according to the market need.
These lead to conclude that both the companies failed in their corporate strategy that limited their opportunity to address the future market. The corporate strategy utilised by the companies failed to foresee the shift in market trend and adopt accordingly, that led to extinction of the obsolete technologies provided by the companies
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