This is our UofC Business Class (Synergy) business audit of BlackBerry (formerly Research In Motion) to determine its viability for potential investors and employees. We want to find out whether BlackBerry presents a good opportunity or not. A comprehensive investigation into the government’s impact, social trends, ethics, social responsibility, technology, marketing, stakeholders, and financial position was done. At the end, an overall conclusions and recommendations were provided. Rufran

1. 2013
Business Audit
BlackBerry (RIM)
Course Name
:
BMC 205 Business Management
Group Name
:
Synergy
Group Members :
Erin Kerr
Gina Gentile
Janelle Campo
Noelia Esquivel
Rufran C. Frago
Instructor
:
Jacklynn Holmes
Author
:
Group 2
Date
:
December 10, 2013

2. EXECUTIVE SUMMARY
This business audit has been completed to evaluate the current position of BlackBerry
(formerly Research In Motion) and determine the viability of the technology company for
potential investors and employees. To establish whether or not BlackBerry presents a good
opportunity for interested parties, a comprehensive investigation into the government’s impact
on the company, social trends, ethics and social responsibility, technology, marketing,
stakeholders, financial position, and overall conclusions and recommendations has been drawn
from the information found.
BlackBerry is a Canadian company that in the past has had government support in the
form of product endorsements. Although there is no policy that requires government employees
to use a specific phone, at this time, two-thirds of government employees use BlackBerry (Press,
2013). Aside from supporting the product as consumers, the government of Canada could also
help pave trade routes and form agreements with other governments to simplify some of the
difficulties faced due to competing business interests. Socially, BlackBerry has suffered backlash
over disrupted service, most notably a worldwide outage that affected users for three days in
October 2011. Consumer support was already waning at that point and the disruption caused
severe unrest amongst the client base. Additionally, delays and discontent over the BlackBerry
10 operating system led to more negative attention in the media and reports that BlackBerry’s
market share dropped 36% between 2009 and 2012 (Economist, 2013).
BlackBerry operates ethically and in a socially responsible way. The company is known
for its support of organizations such as Free the Children and for funding Science and
Engineering programs for youth to encourage future innovation. The company is also well
regarded for its commitment to client privacy and security and does not partake in unlawful
business. Technologically, BlackBerry was once a front-runner in terms of technological
advancements and innovative solutions. Although it has fallen behind its competitors,
BlackBerry is still influencing the market with messaging features and business solutions. From
a marketing perspective, BlackBerry has struggled to keep up with competitors, particularly with
pricing strategies. While priced similarly to comparable Apple and Samsung products, the
prestige is not comparable and the pricing strategy failed to generate sales. Although BlackBerry
made a name for itself by catering to business professionals, in an effort to expand its customer
base, they have begun marketing features that appeal more to people balancing their personal and
professional lives. BlackBerry’s main stakeholders at this time are consumers and employees,
including new CEO John Chen who has been tasked with revitalizing the lagging firm.
Financially, BlackBerry has struggled over the past three years, with sales revenues
dropping from $19.9 billion in 2011 to just $2.7 billion in 2013. Share prices have also
plummeted from an all-time high of $149.90 per share in June 2008 to a mere $6.27 in December
2013, now representing just 4.3% of its former share. Additionally, 2013 has been a bad year
financially with $1 billion worth of inventory being written off and 4500 jobs cut in cost savings
measures.
Despite poor financial performance in recent years and the general loss of market shares
to competitors such as Apple and Samsung, BlackBerry is in a unique position of reinvention and
new management is set on returning glory to the former giant. For investors seeking high-risk
and long-term investments, BlackBerry could recover in coming years, leading to potentially
huge payouts due to the currently low share price. Investing is encouraged.
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3. TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................ 2
INTRODUCTION .......................................................................................................................... 4
COMPANY OVERVIEW .............................................................................................................. 5
POLITICS AND GOVERNMENT IMPACT ................................................................................ 5
SOCIAL TRENDS.......................................................................................................................... 6
ETHICS AND SOCIAL RESPONSIBILITY ................................................................................ 7
TECHNOLOGY ............................................................................................................................. 8
MARKETING................................................................................................................................. 9
STAKEHOLDERS ....................................................................................................................... 10
FINANCE ..................................................................................................................................... 11
RECOMMENDATIONS AND CONCLUSION ......................................................................... 13
BIBLIOGRAPHY ......................................................................................................................... 14
APPENDICES .............................................................................................................................. 18
APPENDIX A – Descriptions of the Most Popular BlackBerry Smartphone Products ............... 18
APPENDIX B – BlackBerry Pricing Strategy and Competition Pricing Comparison ................. 21
APPENDIX C – Blackberry Financial Indicators ........................................................................ 22
APPENDIX D – Financial Highlights (2010 to 2013) ................................................................. 26
INDEX .......................................................................................................................................... 27
Page 3 of 27

4. INTRODUCTION
A comprehensive audit of BlackBerry has been completed to show that despite some of the
company’s deficiencies over the last few years it could be a great time to invest in BlackBerry.
This audit will evaluate the current market position of BlackBerry, as well as specifics on the
company’s financials, political position, ethics and social responsibility practices, social trends,
marketing, and stakeholder considerations. The methodology behind this report is a combination
of market research and comprehensive analysis of competitors and external factors.
It has been found through literary and systematic research that Blackberry was once
perceived as the very best smartphone available on the market (Goldfayne, 2012). The line of
products includes a variety of smartphone devices and a tablet that have stood apart from
competitors with product features such as security, keyboard, and synchronized compatibility
(Michaluk, 2009). BlackBerry continues to maximize its smartphone devices by updating their
technology, increasing quality, and strengthening distribution channels. BlackBerry shows a
positive approach to their ethical and social practices and upholds business ethics by following a
Code of Business Standards and Principles. Despite BlackBerry’s efforts to respond to change,
the company has suffered many setbacks in the past three years including countries threatening
to suspend services, the delayed release of their touch-screen phone and network malfunctions
that affected many users. As a result, quantitative research has been collected to show
BlackBerry’s drop in earnings per share in the last three years.
Given the new venues for change and the drop in shares from $69.30 per share in February
2011 to $6.82 per share as of November 30, 2013 (RBC, 2013), it could be a great opportunity
for investors to invest in BlackBerry now while there is a window involving lower priced shares.
Page 4 of 27

5. COMPANY OVERVIEW
Headquartered in Canada, BlackBerry is an international leader in wireless technology,
best known for introducing the BlackBerry solution in 1999. Officially renamed BlackBerry
Limited in early 2013, the company has been a key player in the smartphone market and has
become one of the world’s most respected wireless telecommunications brands. After more than
20 years in the business, BlackBerry has played a significant role in revolutionizing the way
millions of people in the world stay connected. The company has introduced a portfolio of
integrated hardware, software and service solutions, including the BlackBerry wireless platform,
the BlackBerry Wireless Handheld product line, hardware and software licensing agreements,
radio-modems and several software development tools (Information and Communications
Technologies, 2013). The BlackBerry Wireless Handheld product line includes the BlackBerry
Playbook tablet, BlackBerry smartphones and business software (BlackBerry, 2013d).
POLITICS AND GOVERNMENT IMPACT
In 2010, Saudi Arabia and the United Arab Emirates threatened to suspend BlackBerry
services if they did not provide them access to its customers' messages, which they claim were
needed for security reasons. India and Indonesia have made similar requests in the past, and
talks with those countries are on-going. Indonesia said it will not ban BlackBerry service, but
they would like the company to put a server inside the country to handle communication there
(Niccolai, 2010). A report in the Wall Street Journal said BlackBerry will talk with UAE
operators du and Etisalat over concerns that BlackBerry will impact their revenue streams
(McGinley, 2013). These events contribute to BlackBerry’s growing global political setbacks.
The Government of Canada could assist BlackBerry with its political challenges by paving
a trade route of bilateral business agreements with the countries of concern. This could prevent
Page 5 of 27

6. the two semi-government Telephone Companies in the UAE from blocking BlackBerry to
protect their own business interests.
Many companies are now buying the same smartphones and tablets that their employees
use at home. By losing consumer ground outside of office environments, BlackBerry will find it
harder to win in the workplace (Economist, 2013). Another strategy would be for the government
to use BlackBerry devices in all of its businesses, offices and markets to support the local
business. As there are many government employees, if those offices opted to use BlackBerry
devices, the move would place a solid and firm foothold on a good portion of the market.
SOCIAL TRENDS
BlackBerry’s products underwent a “review of strategic alternatives” that resulted in no
visible alternative strategy and no chief executive. Thorsten Heins, BlackBerry’s CEO since
January 2012, was unseated. BlackBerrys have not only lost out to Apple’s iPhone (and iPad, to
which BlackBerry responded feebly) but also by Android devices. Microsoft phones are also
outselling them, and in its latest quarter, BlackBerry lost $965 million (Economist, 2013).
BlackBerry devices came out late and outmoded, compared to competitor products.
The Times wondered recently whether BlackBerry will go the way of the pager, a
technology that has long been obsolete. The company seemed unsure of what consumers wanted
as it did not release a touch-screen phone until long after Apple, and the device that it eventually
launched was a pale imitation of the iPhone (Surowiecki, 2012). Another major issue was an
incident in July 2012, when BlackBerry services in the UAE faced severe disruption, with users
losing access to messaging and email as BlackBerry’s network grappled with technical
challenges. In October 2011, users worldwide were hit with three days of downtime in another
case of technical failure (McGinley, 2013).
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7. A survey of North American and European companies by research firm Forrester shows
that BlackBerry’s share of mobile devices used by their employees plummeted from 57% in
2009 to 21% in 2013. “That’s a death-knell trajectory,” says Ted Schadler, an analyst, who
reckons BlackBerry’s market share will drop to single digits by 2015 (Economist, 2013).
ETHICS AND SOCIAL RESPONSIBILITY
BlackBerry’s Code of Business Standards and Principles is designed to help BlackBerry
perform work in a legal and ethical manner (BlackBerry, 2013b). BlackBerry only does business
with public officials that have a legitimate business purpose and does not participate in
interactions that violate corruption laws including taking bribes or receiving improper payments.
BlackBerry makes it a priority to protect the confidentiality of information they receive from
their business partners by respecting the intellectual property rights of their suppliers, customers,
competitors and all other third parties. As a public company, BlackBerry prepares accurate,
timely, and clear disclosures in its public filing with security regulators as well as
communications with shareholders. Along with accuracy, BlackBerry keeps their accounting
records up to date and accurate by following the IFRS (Bidulka, 2008).
BlackBerry’s social responsibility is shown by their involvement in communities.
BlackBerry has been a proud supporter of Free the Children since 2011, and also invites students
to go overseas and help build homes and classrooms in under developed countries. BlackBerry is
an active member of community organizations and encourages employee contribution to
community volunteer programs. They actively support Holiday donation programs, food drives,
and learning programs that help support Science and Engineering programs that could benefit the
world with new inventions and technology (BlackBerry, 2013b).
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8. BlackBerry looks to improve operations by lessening their environmental impact. In 2012
the Sustainable Life Cycle Assessment (SLCA) and the Life Cycle Assessment (LCA) worked
together to provide BlackBerry with information to help focus on what they are doing right and
what they can do to reduce overall environmental impact for the BlackBerry Torch9810 and
PlayBook tablet. BlackBerry also focuses on reducing energy and building green data centers
where IT equipment causes the largest impact. BlackBerry uses data systems that require less
power to run, and has added data storage that improves efficiency and frees up storage space. In
2012 BlackBerry introduced a paper procurement policy that is committed to increasing paper
purchases from suppliers who sell recycled paper, and the company is thinking outside of the box
to reduce their carbon footprint (RIM, 2012).
TECHNOLOGY
BlackBerry technology has made an impact worldwide. The BlackBerry was launched in
1999 and was the first wireless phone to support e-mail, Internet, faxing, web browsing and text
messaging. The first colour screen was launched in 2004 and offerings have expanded ever since.
The most recent operating system BlackBerry developed is BlackBerry 10 OS with features
including: BlackBerry® Priority Hub, which curates a view of your most important messages,
BlackBerry® Natural Sound technology that lets you hear every word with intense clarity, instant
previews of BBM, SMS and email from any app let you respond or go to the BlackBerry Hub with
a single touch, lock screen notifications let you view the sender and subject of your latest email, text
or BBM without unlocking, BlackBerry® Keyboard updates further improves your efficiency, and
Reply Now lets you send an automated response to incoming calls when you are too busy to pick
up. Documents To Go™ comes with InTact Technology™, ensuring any formatting changes you
make will remain the way you want them to. I’m running late’ function in BlackBerry Calendar
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9. allows you to instantly let meeting participants know if you’ll be late, enhanced sharing
functionality offers suggestions on who and how to share your pictures, files, links or documents,
learning from your past activity. Easier copy and paste comes from more precise cursor control, a
double tap to select feature, editing options and direct sharing (BlackBerry, 2013a).
MARKETING
Consumer electronic success begins with being able to provide customers with quality,
technologically advanced products. BlackBerry has been a key player in the smartphone market
since 1999 and has revolutionized the way millions of people in the world stay connected.
BlackBerry products include a variety of smartphone and tablet devices, as well as software
applications and accessories. Some of the better known BlackBerry models include the Pearl,
Curve, Bold, Torch and BlackBerry 10. Some key features that set BlackBerry products apart are
strong security features, removable and expandable batteries, multitask programs, multiple form
factors, and compatibility with almost every carrier in the world (Michaluk, 2009).
BlackBerry`s target market was originally tailored to business professionals but has
recently shifted toward those looking to balance both their professional and personal lives.
"BlackBerry believes that its target market is people that are hyper-socially connected and true
multi-taskers that need to get things done" (Lopez, 2013). As BlackBerry continued to evolve
their products and publicize new models, consumers benefited from increased quality and
additional features with each release. The BlackBerry Pearl was the first BlackBerry product
with a trackball and progressive products like the Curve, Bold and Torch included better quality
screens, more memory, built-in chat software, camera phones, mapping software and other
consumer focused additions (Wikipedia, 2013). High level detail of several popular models of
BlackBerry products, including BlackBerry 10, can be found in Appendix A, Figures 1A-5A.
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10. When BlackBerry launched their new BlackBerry 10 smartphones (Z10 and Q10), they
elected to try to keep their prestigious status by pricing units closely to the iPhone 5. Their
pricing strategy centred around what is considered a price skimming strategy - introducing a new
product on the market at a high price and gradually decreasing the price over time as additional
competition enters the market (Althouse, Allan & Hartt, 2013). Unfortunately, strong
competition was already established and the new models did not live up to their competitors.
Proof of pricing strategy and competition pricing can be found in Appendix B. First quarter sales
resulted in an overestimation of approximately 800,000 units; an expected 3.5 million devices
were ready to go but only 2.7 million were actually shipped. The lack of sales for the Z10 and
Q10 indicates that the pricing strategy was not successful (Kuittinen, 2013).
Currently, BlackBerry has offices in North America, Europe and Asia-Pacific. BlackBerry
CMO Frank Boulben confirmed that the new Q10 and Z10 devices were being tested by 150
carriers and at least six BB10 devices would be globally released at varying price points. "Six
new BlackBerry 10 smartphones in 2013? Seeded to carriers across the planet without an
exclusivity agreement? Yup, RIM is doing something very, very right” (Rowinski, 2013, para 1).
STAKEHOLDERS
John Chen, the Executive Chair and CEO of BlackBerry recently accepted the position
after CEO Thorsten Heins stepped down. According to sources, after weeks of weighing a
buyout, the company has chosen to move ahead with new management. Halliwell (2013) details
the importance newly appointed CEO Chen has to accelerate and transform the business. He
explains the commitment to reclaiming success through the adoption of a new mobility
management platform and a new device strategy. Chen is also committed to customers and high
quality products and services that millions of people rely on globally (Halliwell, 2013).
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11. BlackBerry customers are another important stakeholder. As consumers, they are
concerned with the quality of BlackBerry’s products and services and desire modern and updated
features. Giving the devices a competitive edge with a sleek design, apps and music options will
keep consumers interested in future products.
The company is in a time of transition and attempts to satisfy the President and CEO by
giving him the freedom to make changes as he sees fit. A new management platform will allow
multiple devices to work together, much like the cloud where work and home devices sync with
the same content (Ankeny, 2013). The company satisfies consumers by allowing them to provide
consumer reports about their products and services. Sources show that BlackBerry will push a
software update to users that will bring the ability to directly run Android packages on phones
(Williams, 2013). Additionally, BlackBerry is pushing ahead with the BBM service that
consumers have grown to know and enjoy. BlackBerry said it was rolling out its social network
BBM Channels as a downloadable app and would be teaming up with emerging-market
smartphone manufacturers to have BBM preinstalled on their devices (Connors, 2013).
FINANCE
BlackBerry has recently suffered a significant loss of sales and will cut 4500 jobs and write
off nearly $1 billion worth of unsold phones due to its inventory charge of the Z10 phone. Many
factors have affected the profitability of the company’s industry including market stability,
material price changes and competitors. The inventory charge of the Z10 phone has affected
BlackBerry most negatively. Facing intensifying competition, BlackBerry cut its sales and profit
forecasts for this quarter on lower-than-expected demand for smartphones (Miller, 2013).
As the market is maturing and reaching a saturation point, mobile phone sales in the
forecast period are expected to decline at volume and constant value CAGRs of -1% and -5%,
Page 11 of 27

12. respectively, with feature phone sales dropping significantly. With the current smartphone
penetration rate varying from around 50% to over 60% according to different industry sources,
smartphones are poised for stronger volume growth in the forecast period, especially as they
continue replacing feature phones as the primary handset. However, in constant value terms,
smartphone sales are expected to start declining in 2014-2015 due to increasing competition
between carriers trying to win consumers with more attractive prices. Overall, smartphone sales
in the forecast period are projected to register a 4% volume CAGR and a -2% constant value
CAGR over the forecast period (Euromonitor, 2013).
Debt to Equity ratio is a measure of a company's financial leverage calculated by dividing
its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the
company is using to finance its assets and is equal to Debt divided by Equity. Debt equity of less
than 0.5 is acceptable for businesses like BB (Investopedia, 2013a). One of the most important is
return on equity. It is a basic test of how effectively a company's management uses investors'
money. ROE shows whether management is growing the company's value at an acceptable rate.
ROE is equal to Net Income divided by Shareholder Equity. Many professional investors look
for a ROE of at least 15% (Mclure, 2010).
The ratio of net profits to revenues for a company or business segment that shows how
much of each dollar earned by the company is translated into profits is called Net Profit Margin
and is equal to Net Profit divided by Revenue. Net margins will vary from company to
company, and certain ranges can be expected from industry to industry, as similar business
constraints exist in each distinct industry. A company like Wal-Mart has made fortunes for its
shareholders while operating on net margins less than 5% annually, while at the other end of the
spectrum some technology companies can run on net margins of 15-20% or greater
Page 12 of 27

13. (Investopedia, 2013b). Ratio calculations for Blackberry can be found in Appendix C Figures
1C-6C. Appendix D illustrates financial highlights from 2010-2013.
RECOMMENDATIONS AND CONCLUSION
Despite declining sales over the past three years (see Appendix C), BlackBerry is an
established and socially responsible company with extensive experience in the smartphone
market. With the addition of new CEO John Chen and new plans for reinvention, there is a
unique opportunity for investors that are able to tolerate a high level of risk. With BlackBerry
stocks sitting at a share price of $6.82, it is a viable opportunity to invest in a large number of
stocks for a reasonable price as the coming years could offer renewed success for the former
giant. After the collapse of the potential deal with Fairfax Holdings, BlackBerry made it clear
they are in it for the long haul and have plans in place to ensure future success (Babad, 2013).
From an employment perspective, this may not be a desirable time to work for BlackBerry
as job security can’t be guaranteed. As outlined in this comprehensive audit, BlackBerry has
many positive and ethical endeavors, which result in positive global perceptions. With increased
support from the Canadian government and a pricing strategy overhaul, BlackBerry may be able
to regain some of its former glory. With consumers as one of the main stakeholders, effort needs
to be put in to improving public opinion and increasing technological features to improve
consumer reviews and close the gap between BlackBerry and its competitors.
While success is not guaranteed, investors with long-term goals may choose to invest as
the potential for a payout is high. With new management at the helm, a strong track record of
security and privacy, and a marketplace that is saturated with similar phones, BlackBerry may
have a chance to break out of its slump and be more successful than ever.
Page 13 of 27

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%2F1%2F2011&endDate=12%2F6%2F2013&chartView=
Zeman, E. (2013). BlackBerry 10: 6 ways to win back consumers. Retrieved from,
http://www.informationweek.com/mobile/ mobile-devices/blackberry-10-6-ways-to-winback-consumers/d/d-id/1108386?
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18. APPENDICES
APPENDIX A – Descriptions of the Most Popular BlackBerry Smartphone Products
Figure 1A: BlackBerry “Pearl” model information (Wikipedia, 2013).
Figure 2A: BlackBerry “Curve” model information (Wikipedia, 2013).
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19. Figure 3A: BlackBerry “Bold” model information (Wikipedia, 2013).
Figure 4A: BlackBerry “Torch” model information (Wikipedia, 2013).
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20. Figure 5A: BlackBerry “10” model information (Wikipedia, 2013).
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21. APPENDIX B – BlackBerry Pricing Strategy and Competition Pricing Comparison
iPhone 5 Version/Pricing
16GB
32GB
64GB
iPhone 5s (2-year contract)
iPhone 5s (no contract)
$229
$719
$329
$819
$439
$919
Table 1B: BlackBerry 10 competitor, iPhone 5s, current version and pricing figures (Hardy,
2013b).
BB10 Version/Pricing
Contract (2-yr)
No Contract
Various providers at launch (Hardy, 2013a)
AT&T – current (AT&T, 2013)
Sprint – current (Sprint, 2013)
T-Mobile – current (T-Mobile, 2013)
BlackBerry – current (BlackBerry, 2013e)
$199.00
$99.99
$49.99
$99.99
NA
$649.95
$584.99
$529.99
$579.99
$549.00
Table 2B: BlackBerry 10 version and pricing strategy, from initial launch in 2013 to current
pricing available through three different wireless providers.
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22. APPENDIX C – Blackberry Financial Indicators
Figure 1C: BlackBerry earnings per share over a 3 year period (RBC, 2013).
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23. Figure 2C: BlackBerry price to earnings ratio over a 3 year period (RBC, 2013).
Figure 3C: RIM (BlackBerry) debt to equity (Wickenvest, 2012).
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24. Figure 4C: BlackBerry return on equity over a 3 year period (YCharts, 2013).
Figure 5C: Blackberry net profit margin from 2011-2013 (CNN, 2013).
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25. Figure 6C: Ratio calculations (Investopedia, 2013).
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26. APPENDIX D – Financial Highlights (2010 to 2013)
2011
2012
2013
Fiscal 2011 revenue grew
$2.1 billion in cash, cash
Revenue of $2.7 billion
33% over fiscal 2010 to
equivalents, short-term and
$19.9 billion and earnings
long-term investments at
per share grew 47% over
the end of the quarter,
GAAP income from
continuing operations of
$94 million, or $0.18 per
the prior fiscal year to $6.34 which increased by
share diluted
per share diluted
approximately $610 million
in the quarter
Adjusted income from
Cash flow from operations
continuing operations of
of approximately $1.1
$114 million, or $0.22 per
billion, up from
share diluted
approximately $900 million
Gross margin of 40% driven
in Q3
by higher average selling
Revenue of $4.2 billion,
prices and hardware
down 19% from the third
margins
quarter
Figure 1D: RIM’S highlights from 2010-2013 (Blackberry, 2013c)
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27. INDEX
APPENDICES
APPENDIX A
APPENDIX B
Apple’s iPhone
BB10 devices
BIBLIOGRAPHY
BlackBerry 10 OS
BlackBerry solution
BlackBerry Wireless
BlackBerry® Priority Hub
Code of Business Standards
competitive edge
European Union
FIGURE 6: BLACKBERRY EARNINGS PER SHARE
growing burden
IFRS
Index
John Chen
platform
RECOMMENDATION AND CONCLUSION
Saudi Arabia
security features
Sustainable Life Cycle Assessment
TABLE OF CONTENTS
Thorsten Heins
Torch9810
touch-screen
trackball
United Arab Emirates
18
18
22
6
10
14
8
5
5
8
4, 7
11
5
22, 23
5
7
27
10
11
13
5
9
8
3
6
8
6
9
5
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