Video Title: Globalization and RIM
Run Time: 6:32
Classroom Application: Instructors will find this video helpful in the study of the
globalization of markets. The video introduces the phenomenon of globalization and
examines how one company, Research in Motion (RIM), has both taken advantage of the
global marketplace and been challenged by it. Providing students with such knowledge
can help them better understand why globalization is occurring and what opportunities
and challenges it can provide to companies.
Synopsis
This video starts with an overview of the factors involved in the globalization of the
marketplace. It describes how the declining trade barriers and growth in demand around
the world has made globalization “inevitable.” The video then uses Research in Motion
(RIM), the company responsible for inventing the Blackberry smart phone, as an example
of a business pursuing internationalization as a growth strategy and what some of the
challenges to such growth are. In particular, the video details challenges RIM has had in
the Middle East and Asia with the governments of certain countries.
Discussion Questions
1. Explain how “globalization of markets” in today’s world is different from
international trade in era before globalization in the 1970s.
Globalization of markets refers to the gradual integration and growing interdependence
of national economies. In the 1970s countries may have traded raw materials or a few
key products, but for the most part a telephone (for example) in France was made by a
French company while a telephone in the U.S. was made by an American company. That
has all changed. With the Internet and other forms of media today’s consumers and
businesses can access information about products from anywhere in the world and
purchase those products with the click of a mouse. Thus, consumers and businesses in
Chile and Korea may demand Apple iPhones, Starbucks coffee, and Intel microchips
from American companies while Americans do not hesitate to purchase Bosch appliances
from Germany and LG televisions from Korea. Rather than be restricted to what is
available in the home market, consumers and businesses can now access world markets
to purchase anything they need.
2. Explain why RIM has experienced such tremendous growth, even during the
recession that began in 2008.
RIM’s Blackberry is an example of a truly global product that competes in a truly global
marketplace. Because it was the first phone to efficiently allow users to make calls and
exchange emails, the Blackberry became the ubiquitous smart phone of choice for
business users by 2005. Business use quickly spread to consumer use as people began to
realize how useful mobile email access was. The key to the Blackberry’s success was that
it functioned perfectly for what consumers wanted at the time (approximately 20052008), so international customers were willing to take the trouble to purchase the phone
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because it worked the way they wanted it to work — even though it was both foreign and
expensive. Ironically, the market turned after this film was made and Blackberry sales
dropped precipitously as both business and personal users began to see the advantages
of the iPhone that functioned not simply as a mobile communication device but as a
mobile computer that could perform dozens of different jobs from serving as a GPS to
watching movies to accessing weather maps.
3. Discuss RIM’s choice to not release encrypted customer information to the
governments of Saudi Arabia, the United Arab Emirates and India. Was this a heroic
act to preserve political freedom, or simply a practical move to preserve market
share? Explain.
Some governments pressured RIM to provide access to customer encrypted information
sent via Blackberries. These countries claimed that they needed to monitor the
communications of people they felt were a national security threat. Though the solutions
were not discussed publicly, RIM was able to satisfy these governments without
compromising the security of customer information. Though preserving privacy and
freedom of information was probably a factor in RIM’s decision not to divulge the
encrypted information, it is likely that pragmatism dominated their decision, not concern
for human rights. In allowing governments to monitor encrypted information RIM would
have been giving non-company individuals access to highly secret, proprietary
information that could easily have been leaked. Allowing this proprietary information to
be disseminated outside of the company might have permitted RIM’s rivals to copy its
designs and therefore cause RIM to lose its competitive edge in software.
Quiz
1. Which of the following identifies a major reason for companies like RIM to prosper?
a. a decrease in trade barriers
b. the placement of embargoes
c. the establishment of voluntary export restraints
d. the establishment of quotas
Answer: a
Explanation: Embargoes, voluntary export restraints, and the establishment of quotas are
all examples of trade barriers. Companies like RIM were able to take advantage of a
decrease in trade barriers, allowing the company to sell products to consumers all over
the world rather than be restricted to its home country market or a few limited foreign
markets.
2. Trade issues between RIM and countries in the Middle East related to data-encryption
technologies are an example of which of the following types of governmental trade
interventions?
a. development of an industrial base
b. promotion of acceptable practices abroad
c. balance-of-trade adjustments
d. price-controls
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Answer: b
Explanation: Governmental intervention is at times based on noneconomic issues.
Promoting acceptable practices abroad is an example of intervention for a noneconomic
purpose. Governments, for example, may limit trade for security purposes. The United
States at one time prevented exports of data-encryption technologies, fearing that
encryption knowledge could be used to oppress citizens in other countries. Those
regulations have since been lifted. In this case RIM was primarily worried that its own
proprietary software designs would be compromised if it revealed them to foreign
governments.
3. Which of the following is NOT true of RIM’s growth?
a. The organization is pursuing internationalization as a growth strategy.
b. Europe, the Middle East and Asia are all target markets for the company.
c. The company no longer gets the majority of its business from North America.
d. Growth in some countries has been hindered by political difficulties.
Answer: c
Explanation: The company is expanding into Europe, the Middle East and Asia because it
sees the smart phone market in North America as “maturing.” However, the organization
still gets over 60 percent of its sales from the United States, followed by Canada and the
UK.
4. Which of the following political barriers has RIM faced in the Middle East?
a. differences in religion that have led to a reluctant sales force
b. differences in social policy that have led to protests
c. differences in views on privacy that have threatened business investments
d. differences in views on women’s rights that have limited the potential market
Answer: c
Explanation: The video describes the difficulties the organization had in the Middle East
and other areas when governments demanded access to private, encrypted customer
information. The countries threatened to stop selling Blackberries or providing the
services for Blackberries if RIM failed to allow access to the encrypted information. In
most cases, RIM was able comply with the wishes of the governments without
compromising their proprietary software designs.
5. To continue to experience significant global growth, RIM will most likely need to do
all of the following EXCEPT:
a. focus on growing market share in North America
b. focus on growing market share in Europe
c. focus on growing market share in Asia and the Middle East
d. continue providing secure networks despite any government concerns
Answer: a
Explanation: Although the organization gets 60 percent of its sales from North America,
the global growth of the organization is dependent on the expansion of its market share in
Europe, Asia, and the Middle East. In fact, currently RIM’s phones must be able to
compete with the iPhone or it will continue to lose market share at a dramatic pace.
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall