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BlackBerry Expanding in Indonesia

ASCM CEO

Friday October 21, 2016


BlackBerry might not be making smartphones anymore, but the company has a new business model and is attempting to capitalize on the global market. According to The Wall Street Journal, BlackBerry is licensing its software and outsourcing its production in its largest market, Indonesia, which boasts a population of 250 million people.

Last month, BlackBerry, a Canadian company, announced it would stop making handheld devices and instead license production to partners so it can focus its core business on software, Bloomberg reports.

Resty Woro Yuniar reports for The Wall Street Journal that BlackBerry’s new venture unites it with an affiliate of PT Telekomunikasi Indonesia Tbk, Indonesia’s largest wireless carrier. The Indonesian partner will produce, promote, and distribute all BlackBerry-brand devices in Indonesia.

“BlackBerry is no longer just about the smartphone, but the smart in the phone,” says John Chen, BlackBerry executive chairman and CEO, in a statement. “Working with trusted partners to extend the reach and availability of our secure mobility software remains a key focus for the Mobility Solutions unit and this joint venture is just one of our next steps in making our software licensing strategy successful.”

Although BlackBerry lost the smartphone war to Samsung, Apple, and others, it is tapping into the potential presented by Indonesian regulations that next year require producers to meet a 30 percent quota for local content—represented by local manufacturing, software, or investment. In 2018, that amount goes up to 40 percent. In addition, in 2013, Indonesia imposed a 20 percent luxury tax on imported cell phones. 

“Foreign technology companies initially expressed reluctance to answer the call of Indonesian authorities, arguing that Indonesia doesn’t have a reliable supply chain to support the manufacturing of consumer electronics,” Woro Yuniar writes.

Mobile and consumer electronics publication BGR reports that in the first quarter of 2016, Samsung claimed the majority of the world's smartphone market share at 23.2 percent, while Apple came in second, claiming 14.8 percent of the global market. BlackBerry isn’t even on the list. However, The Wall Street Journal reports that in Indonesia, BlackBerry’s BBM messaging service is the top messaging platform. In June, BBM had 60 million Indonesian active users.

In July, Indonesia relented and passed less rigorous regulations, enabling companies to meet local-maker requirements by including software and investment as well as manufacturing. A source quoted in The Wall Street Journal explained that companies such as Apple and Xiaomi likely will use the software allowance to meet the new rules. “The challenge though for them would be in finding a sizable base of software professionals and developers as they scale up,” says Rajeev Nair, an analyst at Strategy Analytics.

Partnering to survive

If you are like me, you are surprised to see BlackBerry in the news, let alone with its own article in The Wall Street Journal. The article provides a great example of how companies can shift their core competencies to survive and thrive. Of course, we aren’t sure if BlackBerry will thrive in this competitive market, but for now, it is surviving. 

Consider the definition of partner relationship management (PRM), as it appears in the APICS Dictionary, 15th edition: “A business strategy and a set of application tools designed to increase the long-term value of a firm’s customer channel network through partner recruitment, development, and profiling; timely communication of marketplace opportunities; sales management; services management; collaboration to improve sales, productivity, and competitiveness; and metrics ensuring that each trading partner contributes to customer satisfaction.”

To understand how actions such as those of BlackBerry might benefit a company, professionals must have a keen understanding of supply chain. The APICS Certified Supply Chain Professional (CSCP) designation demonstrates in-depth supply chain expertise, in addition to customer relations, international trade, information technology enablement, and physical logistics knowledge. Is it time for you to consider earning your CSCP? Visit www.apics.org/cscp for more information.



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