As Mikayla³ has mentioned in her post, Blackberry Ltd. has decided to terminate production on hardware and to invest its capital on software development. Instead, Blackbery will outsource hardware from an Indonesian firm, BB Merah Putih.² Mikayla his indicated that this pivot is related to Blackberry’s strategy on the playing field. She claims Blackberry’s past strategy has been based off of Michael Porter’s⁵ concept of sustaining competitive advantage; however, Blackberry is beginning to shift to strategies based on Rita McGrath’s⁴ transient advantage.

Mikayla does have a point on Blackberry’s change in strategy as the company has disengaged with hardware and is beginning to launch and ramp up advantages in its improved line of software.³ However, Blackberry’s transition from a mix of hardware and software products to just software products seems more than just a strategy changing from sustaining competitive advantage to transient advantage. Blackberry’s decision is also a financial and accounting decision. As their income statement¹ indicates a decline in revenue for hardware and an incline in revenue for software, it would be wise for Blackberry to invest all its capital into software. Since managers are supposed to create value through their decisions⁶, it seems that Blackberry is pivoting to a solely software based company because Blackberry is losing the value created in their hardware and that it is too late to invest into more research and design in their hardware.

Mikayla states that the switch over will improve the operational effectiveness of Blackberry because it will help Blackberry with its “forward movement towards the productivity frontier curve” as Blackberry will be able to demonstrate “inherently reliable, controlled, and secured” applications.³ However this is not the only factor that will improve the operation effectiveness of Blackberry. Because Blackberry is in a state of decline, specializing in one area will help the company simplify itself so that it will be able to know which direction to head off for the future for potential growth. Staying in one field seems to enable Blackberry to reduce costs and save resources as the company will not have to worry as much for the hardware.

Word Count: 350

References

1 Blackberry. “Investor_presentation_Q2_FY16_(Sep).” PDF file, Sept. 2015.

2 Evans, Pete. “Blackberry to Outsource Smartphone Manufacturing from Now On.” CBC News, CBC, 28 Sept. 2016, www.cbc.ca/news/business/blackberry-hardware-loss-1.3781876. Accessed 29 Oct. 2016.

3 Mikayla Trang. “Blackberry – Transition from Hardware to Software.” Mikayla Le’s Blog, UBC Blogs, 1 Oct. 2016, blogs.ubc.ca/mikaylatrangle/. Accessed 29 Oct. 2016.

4 McGrath, Rita Gunther. “Transient Advantage.” Harvard Business Review, PDF ed., 2013, pp. 62-70.

5 Porter, Michael E. “What Is Strategy?” Harvard Business Review, PDF ed., 1996, pp. 61-78.

6 Walther, Larry. “Planning, Directing, and Controlling.” PrinciplesofAccounting.com, 2016, www.principlesofaccounting.com/chapter-17/planning/. Accessed 29 Oct. 2016.

Image Source

McDermid, Brendan. “The New Blackberry Classic Smartphone Is Shown during a Display at the Launch Event in New York, December 17, 2014.” Reuters, 5 June 2016, www.reuters.com/article/uk-blackberry-strategy-idUSKCN0ZL1JF. Accessed 29 Oct. 2016.

Swipe left to reject, swipe right to show you’re interest; then another profile comes up because maybe, just maybe this guy is better than the last. However, it seems as if Tinderization is not only affecting dating, but also the way we shop in today’s globalized, diverse, and dynamic market environments. Just like with Tinder, where will always be a brand that shows up right after you swipe right. With so many choices, shoppers are constantly faced with the sense of a possibility of a better deal, leading “to a sharp decline in brand loyalty”³. The attention span of consumers shorten and consumers now prefer to purchase goods at a time of need or want rather than in event cycles.³

I believe the ‘Tinderization of retail’³ brings a greater importance to the positioning of a company or product and to the comprehension of a company’s positioning within the market. Al Ries and Jack Trout⁴ has already stated that getting into a customer’s mind is very important. Being first will give a company a greater advantage⁴. Because our markets are now so dynamic and that consumers have a shortening attention span, I think companies will need to find more effective ways to constantly change their marketing techniques. The life-span of certain competitive advantages which a company attains in terms of marketing and promotion may be shortening as consumers will get bored of new promotions faster with their shorter attention span. Companies need to consider Transient Advantage², and they will have to launch competitive cycles quite frequently.

Tinderization has probably been a big factor to the shift of customer behavior and decision making from the Tunnel Analogy to a more cyclic model (like the McKinsey model¹). Because new, and potentially better, options are constantly being introduced to the consumer, the number of companies that the consumer considers is constantly changing until the consumer decides on one brand, but even after purchase, the consumer’s evaluation of a brand is still ongoing as the consumer creates expectations with the vast amount of new information he or she receives after purchase. However, Tinderization seems to be beginning to lead consumers away from the loyalty route and bring them back to the active evaluation phase of the McKinsey Model. Because trends, news, and preferences are changing at an increasing rate, the expectations consumers create after purchase may not match the company’s brands unless the company modifies its brands to be able to chase consumer’s metamorphosing needs. Points of parity and points of differences must be assessed carefully within a company in order to sustain consumer loyalty.

Word Count: 430

References

1 Court, David, et al. “The Consumer Decision Journey.” McKinsey & Company, June 2009, www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-consumer-decision-journey. Accessed 15 Oct. 2016.

2 McGrath, Rita Gunther. “Transient Advantage.” Harvard Business Review, PDF ed., 2013, pp. 62-70.

3 Peterson, Hayley. “Tinder Culture Has Taken Over, and Now It’s Killing Retail.” Business Insider, 15 Oct. 2016, www.businessinsider.com/tinder-culture-is-hurting-retailers-2016-10. Accessed 15 Oct. 2016.

4 “Product Positioning.” Quick MBA, International Centre for Management and Business Administration, 2010, www.quickmba.com/marketing/ries-trout/positioning/. Accessed 15 Oct. 2016.

Image Source

“Getty Images.” Business Insider, 15 Oct. 2016, www.businessinsider.com/tinder-culture-is-hurting-retailers-2016-10. Accessed 15 Oct. 2016.

Rentz, Andreas. “Andreas Rentz/Getty Images.” Business Insider, 15 Oct. 2016, www.businessinsider.com/tinder-culture-is-hurting-retailers-2016-10. Accessed 15 Oct. 2016.

In hopes of coping with negative interest rates, Commerzbank, Germany’s second largest bank, recently announced a massive restructuring. The process will last until 2020, cutting 9,600 jobs and costing €1.1 billion. The bank will merge its major units and to focus on two customer segments: corporate clients and small-businesses. There will be a suspension of dividends after 2016 payments.² The bank is expecting “a small net profit” for 2016. Through restructuring, Commerzbank aims to reduce operation costs and create a cost-effective structure by simplifying the structure of the bank and by reducing trade activities, to “[evolve] into a digital enterprise” by investing in digitalization, and to raise market shares.¹

Commerzbank’s new strategy seems promising as they use their new strategy to overcome the threats of the sharply fluctuating markets and weaknesses within their cost structure. In the idea of Transient Advantage, a successful company “must be willing to honestly assess whether current advantages are at risk”.³ In Commerzbank’s case, they see that their cost-structure as a competitive advantage is at risk, therefore they are calling to restructure to simplify their cost-structure. It is important for Commerzbank to refocus their key activities through the disengagement³ of certain products to better deliver their value propositions. Porter mentioned in his article, What is Strategy, “operational strategy and effectiveness are both essential to superior performance”.⁵ Commerzbank’s simplification may allow for better operational effectiveness, while they try to launch, ramp-up, and exploit³ new advantages allow for better operational strategy. Because the competition for banks in Germany is extremely fierce at the moment², Commerzbank made the right decision to work on their competitive strategy.

Stakeholders at risk of the restructuring of Commerzbank may include customers and clients, shareholders, and employees. The employees will be affected the most as many will lose their jobs. The massive job cuts may pose an ethics issue. A large group of people will now be unemployed and with the banking industry’s instability and sharp fluctuations⁴, there may be some difficulty for these people to find jobs afterwards; however, conversely if Commerzbank continues with an inefficient cost-structure and decreasing revenues, the bank may fall into trouble, resulting in possibly jeopardizing even more employees.

Word Count: 361

References

1 Commerzbank. “Commerzbank 4.0.” PDF file, 30 Sept. 2016.

2 Henning, Eyk, and Ulrike Dauer. “Commerzbank to Slash Jobs, Scrap Dividend in Broad Revamp.” The Wall Street Journal, 29 Sept. 2016, www.wsj.com/articles/commerzbank-to-slash-jobs-scrap-dividend-in-broad-revamp-1475139832. Accessed 2 Oct. 2016.

3 McGrath, Rita Gunther. “Transient Advantage.” Harvard Business Review, PDF ed., 2013, pp. 62-70.

4 Melby, Caleb, and Angela Cullen. “Fines, Withdrawals, Job Cuts. It Was an Ugly Day for Global Banks.” Bloomberg, 29 Sept. 2016, www.bloomberg.com/news/articles/2016-09-29/from-deutsche-bank-to-wells-fargo-a-bad-run-for-giant-lenders. Accessed 2 Oct. 2016.

5 Porter, Michael E. “What Is Strategy?” Harvard Business Review, PDF ed., 1996, pp. 61-78.

Image Source

Pfaffenbach, Kai. “The Headquarters of Germany’s Commerzbank Are Photographed behind the Euro Sign in Frankfurt, Germany.” Reuters, 30 Sept. 2016, www.reuters.com/article/us-commerzbank-restructuring-idUSKCN11Z13T. Accessed 2 Oct. 2016.