Motorola, Inc.

Former type

Public

Industry

Telecommunications

Fate

Divided into Motorola Mobilityand Motorola Solutions

Successor

Motorola Mobility
Motorola Solutions
Freescale Semiconductor
ON Semiconductor
Arris Group (General Instrument)
Cambium Networks

Founded

September 25, 1928

Defunct

January 4, 2011

Headquarters

1303 East Algonquin Road,[1]Schaumburg, Illinois, United States

Area served

Worldwide

Key people

Gregory Brown(CEO and Chairman-Motorola Solutions)[2]

Products

Tablet computers
Mobile phones
Smartphones
Two-way radios
Networking systems
Cable television systems
Wireless broadband networks
RFID systems
Mobile telephone infrastructure

Total assets

US$ 11.851 billion (2013) [3]

US$ 12.679 billion (2012) [3]

Number of employees

40,000 (2014)[4]

Website

www.motorola.com

INTRODUCTION
The case examines the strategies adopted by the US electronics company, Motorola, in
China. It focuses on Motorola's initiatives in the Chinese market to establish itself as a
major brand. The case provides detailed information on the four-point strategy adopted
by Motorola in China and the results of the same.
The case throws light on the increasing competition in the Chinese mobile handset
market and the reasons for Motorola changing its strategy. The case also deals with the
impact of SARS on the market and the future prospects of Motorola in China. The case
provides detailed information on the Chinese mobile handset market.
Motorola Mobility, owned by Google, is breaking through the barriers that separate
people from the things they love. We're designing technology that connects seamlessly so
consumers have the best content at their fingertips, every second of every day. TV, talk,
text, email and web surfing we're putting people at the center of it all. It's what we call a
Motorola Powered future and we're making the devices that do more, so people can do
more.

REDEFINING MOBILITY
1984. It was a big year for mobile technology, a turning-point year, because the very first
commercial portable cellphone rocked the world. DynaTAC. The Brick Phone. It was the
device that ushered in the mobile phone era that has come to define who we are today.
And it was invented by Motorola.
Cellphones have changed a lot since then, but Motorola's innovative spirit is as strong as
ever. It's what keeps us developing products that transform our customers' lives, making
them easier, smoother and more enjoyable. Our portfolio includes the most amazing
devices on the planet. Like our blazing-fast Android powered smartphones, led by the
acclaimed DROID by Motorola family of products.
Recently, we improved upon a legend when we introduced the next generation Motorola
RAZR. Rail thin, lightning fast, Business Ready with air-tight security, and neverbefore-seen software innovationsDROID RAZR by Motorola brings all the pieces of
busy lives together in one beautiful device.
For fitness junkies, we developed MOTOACTV a ground-breaking training system
that is both a motivating personal trainer and DJ in one lightweight device. It records and
charts your workout data so you can attach numbers and progress to the sweat you've
spilled, but it also learns which songs pump you up most and creates personalized
playlists to push you beyond your limits.
And let's not forget our stunning tablets, crystal-clear hands-free headsets and inspired
accessories that make life on the go as rich as possible.
Our customers are addicted to their Motorola products. Why wouldn't they be?
Combining technological advances with exceptional design, our devices give them the
freedom to do more.

MORE THAN DEVICES

As our home and mobile lives converge, Motorola Mobility continues to invent
technology that serves consumers' digital needs and make life easier.
Take SMARTACTIONS. It's an app ready to take over changes so users have less to
think about in a day. Who doesn't get concerned with battery life once in a while? With
SMARTACTIONS that's one less worry because it can automatically change settings to
optimize power. For those people that always forget to kill the ringer at work,
SMARTACTIONS can remember to do it for them. It's the app that keeps an eye on the
phone, so users can focus on more important things.
Or check out MotoCast, the app that lets users sync, store and access the stuff stored on
their home computers from their smartphone, tablet or even another computer. Users can
get instant access to entire libraries of photos, music, videos, documents and more
whenever they need them wherever they are.
We understand that it's not just about devices, it's how those devices can be used. So get
ready for more breakthroughs and more connection.

HOME: WHERE CONSUMERS RULE

Once upon a time TV was king and people just watched what was on. Today, it's a
different story. Consumers demand total control over their content. They crave the
ultimate personalized experience: shows on any screen, in any room, at any moment.
They want a TV that practically mind-reads what they're itching to see next. Broadband
blazing enough to keep up with their fast-action games. And the power to control what
plays at home, even from far far away. In a word, it's all about more. More access, more
content, on more devices, in more places.

We're empowering them with just that. Mobility's Home portfolio includes video and
voice and data solutions to lead the way for greater convergence than ever before. We're
pioneering technologies that let consumers personalize their home entertainment
experience and sync intuitive media across multiple screens. (Think the world's first-ever
digitally-assisted living room.) By blazing new video gateways, we're exponentially
expanding access to content everywhere, bringing the home and mobile space closer
together. The benefits of this next-generation home ecosystem are practically endless.
For service providers, it can be daunting to keep up. Fear not. We have the lightningquick software and iron-clad security to help providers stay on top while thrilling
consumers and keeping connections safe. Using our Medios software, consumers can
sync streaming content between devices, anywhere, at any time. So social media junkies
can use Facebook to keep in touch with their friends while sharing content of all kinds,
perfect for those are-you-seeing-this?! moments. While the socially conscious can use
our 4HOME cloud technology to monitor which appliances are consuming the most
energy in every room. It's a jaw-dropping opportunity for the industry, and our flexible
portfolio of Motorola Home products is leading the revolution.
People are looking for a new era of convergence, and Motorola Mobility products are
leading the way. We're designing mobile devices, wireless accessories and video
gateways to connect people and enrich their lives in ways they haven't even considered
possible.
Innovation that puts people on top at Motorola Mobility it's our driving passion, and we
do it better than anyone else.

HISTORY
Motorola started in Chicago, Illinois, as Galvin Manufacturing Corporation (at 847
West Harrison Street)[12] in 1928 when brothers, Paul V. and Joseph E. Galvin, [13]
[14]

purchased the bankrupt Stewart Battery Company's battery-eliminator plans and

manufacturing equipment at auction for $750. Galvin Manufacturing Corporation set up

shop in a small section of a rented building. The company had $565 in working capital
and five employees. The first week's payroll was $63.
The company's first products were battery-eliminators, devices that enabled batterypowered radios to operate on household electricity. Due to advances in radio technology,
battery-eliminators soon became obsolete. Paul Galvin learned that some radio
technicians were installing sets in cars, and challenged his engineers to design an
inexpensive car radio that could be installed in most vehicles. His team was successful,
and Galvin was able to demonstrate a working model of the radio at the June 1930 Radio
Manufacturers Association convention in Atlantic City, New Jersey. He brought home
enough orders to keep the company in business.
Paul Galvin wanted a brand name for Galvin Manufacturing Corporation's new car radio,
and created the name Motorola by linking "motor" (for motorcar) with "ola" (it was a
popular ending for many companies at the time, e.g. Moviola,Crayola.).[15] The company
sold its first Motorola branded radio on June 23, 1930, to H.C. Wall of Fort Wayne,
Indiana, for $30. The Motorola brand name became so well-known that Galvin
Manufacturing Corporation later changed its name to Motorola, Inc.
Galvin Manufacturing Corporation began selling Motorola car-radio receivers to police
departments and municipalities in November 1930. The company's first public safety
customers (all in the U.S. state of Illinois) included the Village of River Forest, Village of

Bellwood Police Department, City of Evanston Police, Illinois State Highway Police, and
Cook County (Chicago area) Police.
Many of Motorola's products have been radio-related, starting with a battery
eliminator for radios, through the first hand-held walkie-talkie in the world in 1940,
[18]

defense electronics, cellular infrastructure

equipment,

and

mobile

phone

manufacturing. In the same year, the company built its research and development
program with Dan Noble, a pioneer in FM radio and semiconductor technologies, who
joined the company as director of research. The company produced the hand-held AM
SCR-536 radio during World War II, which was vital to Allied communication. Motorola
ranked 94th among United States corporations in the value of World War II military
production contracts.
Motorola went public in 1943,[20] and became Motorola, Inc. in 1947. At that time
Motorola's main business was producing and selling televisions and radios.

FUNCTION OF MOTOROLA
Real-Time Analytics: Executive-style dashboards, roll call, trendcasting, heat maps, area
breakdowns, crime-type analysis, time of day/day of week analysis and more.
Robust, Sharable Reporting: Create ad hoc or scheduled reports and graphics custom to
your organizations needs and send them to any email recipient.
Data Quality and Validation: Eliminate common data entry errors such as mismapped
and misclassified crimes. The Data Quality and Validation (DQV) tool includes built-in
notifications regarding data fidelity, click-to-correct mismapped crimes, and rule
assignments to ensure mismappings are fixed and prevented in the future.
Interjurisdictional Data Sharing: Interjurisdictional Data Sharing is a premium module
for CommandCentral Analytics. It gives users the ability to compile, review, and analyze
data across two or more law enforcement jurisdictions at the same time. Switching from
your agencys data to all shared data is as simple as the click of an on/off switch.
Shape File Support: Segment your policing jurisdictions into separate beats or zones in
order to provide staff with crime map reports detailing the criminal activity that occurred
during their off time.
Unlimited Custom Analysis Tabs: In addition to five preconfigured views, users can
create an unlimited number of custom analysis tabs each allowing them to customize
their preferred layout, what information they want to see, and how they want to see it.
Full Narrative Case Reports: There are no restrictions on narrative length so you get a
more complete and detailed understanding of incidents.
Vendor Agnostic: Integrate CAD and RMS data from any existing vendor.

Device Agnostic: Work seamlessly from desktop to mobile, regardless of device type or
operating system used.
Integrated Citizen Camera Registration: Enlist willing citizens to assist your crime
fighting efforts by securely identifying and registering the location of their residential or
commercial security cameras. As users sign up, providing their contact information,
camera information, and location, the information will automatically be available to you.
Whenever there is a crime, you can access the list of registered cameras and contact the
owners, saving you time and effort during emergency responses and investigations.
Two major Issues of case is :

The strategies adopted by Motorola to gain popularity with Chinese consumers.

How far those strategies helped Motorola become a successful company in China.

REVIEW OF LITERATURE
COMPANY OVERVIEW
Motorola Inc., a global leader in offering integrated communication solutions and
embedded electronic solutions, was founded in 1928. From its humble beginnings
making rectifiers and mobile radios, Motorola grew up in the 1940s and 1950s, and in the
1960s, it began to develop overseas markets and gradually became a global company.
Currently Motorola has over 95,000 employees across the globe, and its business covers
wireless communications, semiconductors, automobile electronics, broadband and
Internet access products. Motorola is a technology leader in the fields of mobile phones,
pagers, two-way radios and commercial GSM and CDMA systems. In 2002, Motorola
had a total sales volume of US$ 27.3 billion. Mr. Christopher Galvin is Chairman and
Chief Executive Officer of Motorola Inc.
Review of the related literature is one of the first steps in research process. It consists of
summary of findings of research carried out in the past on same directly and indirectly
related topics. This review provides insight to the researchers regarding what is already
known and what remains to be tested regarding the topic of research. It guides the
researcher to avoid duplication and provides useful suggestion for further research of
given topic.
Market Analysis and Consumer Research Organization has presented a report on, A
study of Mobile Phone Usage among the Teenager and Youth in Mumbai They have
attempted to study the have attempted to study the attitude of teenager of towards cellular
phones and enumerate the pattern and arrive peculiarities gender wise14. Further they
have examined the way young people relate to the functionality of mobile phones as well
as assess observable phenomena. It was analyzed that majority of respondents perceive
cell phone as the technology that offers convenience and makes their life easier.

10

Srivastava and Bhatnagar in their article Turnaround @ Motorola India Mobile

Devices Business through the HR Lever published in Vikalpa, Volume 33, No., January
March 2008 the study assessed turnaround: Motorola India Mobile device business
through the HR lever15. It is a comprehensive and intensive case study. SWOT analysis
of Motorola India was highlighted. The study shows how company overcomes from
failure to success by using various strategies. The study is on behaviors and preference of
consumer. A through review of literature revealed that most of the studies reported on
service quality focused on the service delivery aspects, ignoring the role of technical
quality. In this context, a study of Seth et.al discussed above is worth noting which
developed a valid and reliable instrument to measure customer perceived service quality
incorporating both service delivery as well as technical quality aspects. On the basis of
225 sample size who are regular users of cellular mobile service the study concludes that
responsiveness is the best predictor, followed by reliability, customer perceived network,
quality, assurance conveniences, empathy and tangibles.
Motorola in China

Motorola opened a representative office in Beijing in 1987, and set up Motorola

(China) Electronics Ltd. in Tianjin in 1992

Currently Motorola's facilities in China include a wholly-owned company, a

holding company, 9 joint ventures and 24 subsidiaries, with more than 12,000
employees

Total investment in China by the end of 2002: US$ 3.4 billion

Sales in China in 2002: US$5.7 billion

Motorola's Performance in China in 2003

Total sales: US$4.67 billion

Total exports: US$4.09 billion (including US$1.29 billion in International

procurement and an export of US$2.8 billion by Motorola China)

Local sourcing: US$2.8 billion

Total employees: 10,000(with 1,400 for R&D)

11

METHODOLOGY
Testing of modern microprocessor designs remains a challenging problem. At Motorola's
Somerset Design Center, we rely heavily on Design-For-Test (DFT) to address these
challenges. To date our efforts have been very successful. This paper reviews our DFT
methodology and how the DFT group is dealing with the new challenges that are facing
PowerPCTM microprocessor designs Design-for-test

methodology for Motorola

PowerPCTM microprocessors. Available from:

Motorola SPS's SCORPION project was completed in approximately six months using
Cadence's Alta system-level methodology. The SPW design environment was used to
create and test a virtual prototype of the Motorola Graphics Engine chip before
implementation. The original Graphics Engine design was targeted to a FPGA, placed on
a printed circuit board for rapid prototyping and run in a test facility. Testing involved a
real video source feeding the design while designers verified the image on screen. Once
designers were satisfied with the design, it was retargeted.
Because the SPW design environment supports parameterized libraries, the development
team was able to reuse portions of the previous design of the Graphic Engine. SPW
provided the front-end environment to capture and reuse specific blocks from the
Graphics Engine to simulate the entire SCORPION chip, and then to generate VHDL or
Verilog HDL for synthesis. From synthesis, the design was targeted to a Motorola
submicron technology.
The completion of the SCORPION project underscores Motorola's ongoing commitment
to Cadence's Alta system-level design methodology. The methodology has been used
successfully within Motorola for virtual prototyping before silicon implementation and
design reuse, as well as for intellectual property delivery to customers.
In 1986, Bill Smith, a senior engineer and scientist within Motorolas Communications
Division, introduced the concept of Six Sigma in response to increasing complaints from

12

the field sales force about warranty claims. It was a new method for standardizing the
way defects are counted, with Six Sigma being near perfection. Smith crafted the original
statistics and formulas that were the beginnings of Motorolas Six Sigma methodology.
He took his ideas to CEO Bob Galvin, who was struck by Smiths passion and came to
recognize the approach as key to addressing quality concerns. Six Sigma became central
to Motorolas strategy of delivering products that were fit for use by customers.
Following a common Six Sigma methodology (measure, analyze, improve and control)
Motorola began its journey of documenting key processes, aligning processes to critical
customer requirements and installing measurement and analysis systems to continuously
improve the process. As a result,
FROM QUALITY TO BUSINESS IMPROVEMENT
While Six Sigma was originally created as a continuous quality improvement technique,
today it is significantly different than the total quality management (TQM) approach of
the 1980s. Table 1 (p. 13) shows the key differences between Six Sigma and TQM. From
our extensive experience, Motorola has learned Six Sigma goes far beyond counting
defects in a process or product. The next generation Six Sigma is an overall high
performance system that executes business strategy. Experience leads us to the insight
that Six Sigma demands the following four steps: 1.Align executives to the right
objectives and targets. 2.Mobilize improvement teams. 3.Accelerate results. 4.Govern
sustained improvement.
The new Six Sigma starts with senior executives creating a balanced scorecard of
strategic goals, metrics and initiatives to identify the improvement points that will have
the most effect on the organizations bottom line (see Figure 1). Critical scorecard metrics
drive stretch goals for the various business processes owned and supervised by senior
executives. Process owners champion the creation of high impact improvement projects
to realize the strategic goals. In the second generation Six Sigma at Motorola, processes
are not limited to the classic product and service domains. They can involve market share
improvements, better cash flow and improved human resource processes. Executives

13

select and supervise a handful of improvement projects by releasing constraints in

business processes that cause critical business gaps.
Six Sigma business improvement teams use an action learning framework to build their
capability and execute the project (see Figure 3). Executives select appropriate BB and
Green Belt (GB) team members based on functional expertise and provide appropriate
resources. Our action learning framework methodology combines structured education
with real-time project work and coaching. This approach quickly bridges candidates from
learning to doing. BB and GB candidates take an assigned business improvement project
to their training. Throughout the training and project work, they are learning problem
solving, project management, process optimization and statistical skills while applying
them to the business problem at hand. Outside the classroom, the candidates and project
teams receive expert support from coaches on a justin-time basis. Ongoing reviews with
the project Champions also ensure the projects are progressing according to their timeline
and milestones. Motorola recognizes change is best accomplished in sprints rather than
marathons, so aggressive clock management is key to driving projects toward the desired
results in time to make a difference. Finally, a campaign management approach helps
integrate the

14

DATA ANALYSIS & INTERPRETATIN

DATA While EDAS can accept any delimited text file for input, the manufacturing data
used by the system usually comes from two main sources: the Synergy database, and the
FTDB database. Physical and electrical data recorded during the wafer manufacturing
process is stored in the Synergy database, which is based upon Oracle. EDAS users can
extract the information via a Pro C and Motif interface, which stores the extracted data in
several SAS datasets required by EDAS. Physical and electrical data recorded during the
final manufacturing process comes from the testers in binary files using the industry
standard Standard Test Data Format (STDF) files. The FTDB system records information
about the contents of these files into an Oracle database. EDAS users can query the
database, then acquire the proper STDF files and have them converted to SAS datasets
using a SAS/AF application that is part of EDAS. Any Motorola Synergy or FTDB
database anywhere in the world can be accessed remotely, allowing engineers to analyze
their products from inception to shipment, as parts move through various factories. EDAS
uses two datasets for its analysis. The first holds the information about the wafers and lots
under test, as well as the test results data. The second contains information describing
each test the values used, as well as any boundary, spec or control limits associated with
each test that may be in the database.
GURU RATING SCORECARD
P/E Growth Investor Peter Lynch
MSI gets a 0% rating based on Peter Lynch's methodology.
Detailed Analysis

0%

Value Investor Benjamin Graham

MSI gets a 43% rating based on Benjamin

43%

Graham'smethodology.
Detailed Analysis
Momentum Strategy Investor Validea

71%

MSI gets a 71% rating based on Validea

15

Momentummethodology.
Detailed Analysis

Growth/Value Investor James O'Shaughnessy

MSI gets a 40% rating based on James

40%

O'Shaughnessy'smethodology.
Detailed Analysis
Small Cap Growth Investor Motley Fool
MSI gets a 41% rating based on Motley

41%

Fool's methodology.
Detailed Analysis
Contrarian Investor David Dreman
MSI gets a 36% rating based on David

36%

Dreman's methodology.
Detailed Analysis
Growth/Value Investor Martin Zweig
MSI gets a 46% rating based on Martin Zweig's methodology.
Detailed Analysis

46%

Price/Sales Investor Kenneth Fisher

MSI gets a 28% rating based on Kenneth

28%

Fisher'smethodology.

DETAILED ANALYSIS
The names of individual investment advisors (i.e., the 'gurus') appearing ON THIS
WEBSITE are for identification purposes ONLY. The names are used to identify the
methodology as derived from the guru's published sources. The names of the individual
gurus are not intended to suggest or imply any affiliation with or endorsement of, or even
any agreement with the information displayed on this website personally by such gurus,
or any knowledge or approval by such persons of the content on this website. All
trademarks, service marks and trade names appearing on this website are the property of

16

their respective owners, and are likewise used for identification purposes only.
The NASDAQ Stock Market, Inc. ("NASDAQ"), its affiliates, third party information
providers, or any of these entities' officers, employees, directors, or agents have not: (1)
passed on the merit of the information provided on this website or on any of these
securities; or (2) endorsed or sponsored any of these securities. ADVICE FROM A
SECURITIES PROFESSIONAL IS STRONGLY ADVISED. The information contained
on this website is provided for informational purposes only.

17

STRATEGIC
Introduction
I have researched the Motorola Incorporation and with the information have created a
strategic audit for them. Motorola is the leader in global communications. They are
currently revolutionizing broadband. The companies headquarter is in Schaumberg,
Illinois with 320 other facilities in 73 countries. Motorola's CEO and Chairman is
Edward J. Zander and employs more than 9,000 people worldwide and had sales of $42.9
billion in 2006. Motorola today has three business segments: 1) Mobile devices 2) Home
and networks Mobility and 3) Enterprise Mobility solutions. This company has come a
long way since its first product which was the battery eliminator in 1928 and they have
also been recognized for their dedication to ethical business practices. Their products
over the years have grown and changed along with their drive for excellence which has
become stronger than ever. What more can this company do? The strategic audit I have
prepared might shed some light on some ideas for them.
STRATEGIC AUDIT
Section V: Analysis of Strategic Factors.
SWOT- Portfolio (S) - They have a very strong portfolio but need to beef it up. In 2007,
they invested in Vocera Communications. What Vocera Communications does is provide
wireless communications systems which enable instant voice communication among
mobile workers to leading institutions and companies requiring enhanced customer
service, productivity, and teamwork.
Multiple Business Units (S) - What the Connected Home Solutions segment provides is
wired and wireless broadband networks for homes. This also includes digital set-top
boxes and cable modems. Their Mobil Devices segment designs, manufactures, and
markets mobile phones and accessories. Not only do these devices communicate they
also provide access to data that can be managed. Their Networks and Entertainment
segment provide government, public safety organizations, network service providers, and

18

enterprise customers with integrated voice and data communications along with
information solutions.
Company Structure (W) - Corporate governance is the way they manage their business
responsibly in order to serve the needs and interests of their shareholders. Their board of
directors is elected by shareholders and responsible to them too. The company's business
is run by their employees, managers and officers, under the direction of their chief
executive officer and the oversight of the board. They feel that this way will enhance the
long-term value of the corporation for shareholders. The board monitors the performance
of their CEO and senior management in order to ensure shareholders' long-term interests
are being served.
Innovation (W) The Motorola Fellows are a group of people who have a critical role in
technological development of Motorola. They are focusing on technology advancements
and innovation. All members are experts, mentors, and ambassadors of subject matters.
New Industries (O) In the automotive-communications industry there is an emerging
market called Telematics. What Telematics does is use wireless voice and data to provide
locations, directions, information, and entertainment services to drivers. Motorola's core
technology components are found in their Telematics Communications Unit and this is
how the car and driver are connected to the response center. This is very helpful in
emergency situation or even if one is lost.
Multi-Media (O) - Motorola has developed a multi-media mobile device called the
Mobile Extreme Convergence. This new development will remove many flaws and
limitations of design and costs. What this new product has done is simplified the design
of the hardware and software components of the products in order to reduce the cost for
the consumer purchase.
Global Markets (T) Even with their forecasted sales for 2008 being over 767 million

19

phones, the phones have seen a decrease in price. Because of this, it is expected that the
next five years the global market will see weaker growth rates.
Advanced Technologies (T + W) Competitors are basking in the glory that they have
came up with an Iphone or IPOD and the leader in communications hasn't. This is a threat
and weakness for Motorola and they should really think about developing one. One unit
device that serves as a phone and a music player would definitely be marketable to
younger generations.
Review of Mission and Objectives- Motorola's mission is to seek the benefits the
communities around them at every facility. They achieve this mission through making
strategic grants, strong partnerships with their community, fostering innovation, and
engaging their stakeholders. Their vision is to uniquely contribute in improving the world
they live.
Section

VI:

Strategic

Alternatives

and

Recommended

Strategy/Strategies.

Strategic Alternatives- Motorola has a strong portfolio right now and I feel that if they
took on a parenting strategy it would definitely help it grow even more. A successful
parenting company is the Altria Corporation. What the parenting strategy does is focus on
resources and capabilities used to build value across business units. The funds that come
from such a strategy could help Motorola reach above their competitors quite easily.
Another strategy I feel could benefit Motorola is the horizontal growth strategy. Through
this strategy they could acquire market share, production facilities, or even specialized
technology. Expanding into regions that they have not ventured into will definitely help
in positioning them at the top next to the Asian market. Their competitors are a very big
threat right now and to out perform them they would have to look into the competitive
strategy of differentiation. The differentiation strategy will give them the ability to
provide unique and superior value to the buyer in terms of quality, special features, or
after-sale services. With the strategies they have in place already and the multi-business
units they have I feel that the best strategy right now would be the competitive strategy.

20

They are doing well with most of their strategic factors and this strategy would definitely
help them realize what really is going on around them, especially with the advanced
technologies which are a threat and weakness to Motorola.
Section VII: Implementation.
The program I feel will best help Motorola in any strategy I mentioned above would be
TQM (total quality management). This program stresses commitment and without
commitment nothing will work. It also emphasizes prevention. All employees will focus
on customer satisfaction that means internal as well as external. All employees will be
trained on what and how to measure and interpret data. All operations will be
continuously monitored. Through trust and teamwork employees will be empowered to
make decision independently and together. This implementation program will help all
involved obtain better quality, quicker responses, greater flexibility, and improve or
eliminate

non-value-adding

work

which

is

what

TQM

is

all

about.

Section VIII: Evaluation and Control.

Motorola is having a difficult time with some of their strategic factors such as innovation,
new industries, and the global market; they should use the balance scorecard approach.
Here they will be able to focus on four main areas: 1) Financial 2) Customer 3) Internal
business perspectives and 4) Innovation and learning. Each will be assigned a measure,
target, and initiative. The balanced scorecard is a strategic planning and management
system. It transforms an organization's strategic plan and provides a framework that not
only provides performance measurements, but helps planners identify what should be
done and measured. It enables executives to truly execute their strategies. The balanced
scorecard is a management system that enables organizations to clarify their vision,
strategy, and translate them into action. It provides feedback around both the internal
business processes and external outcomes in order to continuously improve strategic
performance and results. When fully deployed, the balanced scorecard transforms
strategic planning from an academic exercise into the nerve center of an enterprise.

21

Motorola's Strategy for Strategic Investment in China

Motorola's growth in China goes hand in hand with China's economic development and
China's increasing participation in the world economy. Motorola's is increasing its
commitment to supporting local research and development both inside the company and
in partnership with research organizations and universities in China. In addition,
Motorola is devoting essential corporate resources to help develop the capabilities of
local suppliers so that they can take part in the company's uncompromising, world-class
supply chain. As part of Motorola's commitment to China following the country's
ascension to the WTO, the company recently pledged $90 million to set up an R&D
company in Beijing.
Since entering China, Motorola has dedicated itself to the localization of the company's
management ranks. The company's strategies are best summarized as below:

Motorola is steadfastly committed to investing in China and transferring

technology and building local manufacturing and R & D capabilities in order to
provide the country with advanced communications solutions.

The company will continue its long-term plan to localize management in China
and to develop and train excellent local management talents.

The company will continue to work with local companies to create a

comprehensive local supply chain.

Promote joint ventures and cooperative projects with local partners to take
advantage of China's new market opportunities that result from China's increasing
integration into the world market.

China, Motorola is now focusing on

Creating global centers for excellence in China for the company--manufacturing

and R&D centers

Looking for new growth opportunities in the areas aside from our existing main
business --E911, broadband and automotive electronics

22

Motorola : "A Good Corporate Citizen of China

In China, Motorola has been honoring its long-term commitment to China by also being a
good corporate citizen in the country. Such activities rang from philanthropy to
supporting China's accession into the World Trade Organization (WTO). Here are the
highlights:

Anti-SARS: In May 2003, Motorola donated a total of RMB 11.80 million worth
of anti-SARS equipment, cash and goods.

Project Hope: Donating RMB 27 million over 9 years setting up more than 60
Project Hope primary schools and funding 12,000 poverty-stricken children to
return to school.

Higher Education: Providing RMB 11 million to 12 universities including Peking

University and Tsinghua University.

Disaster Relief: Donated flooded areas along the Yangtze River valley and the
Northeast China region; setting up 11 schools for homeless children in flooded
areas.

Sports Sponsorship: The 11th Asian Games, the 21st Universiade, the 7th and 8th
National Games, CNBA, National Football League Matches, Badminton Matches,
and Games for the Handicapped.

Environmental Protection: "green China" Program in 1998.And, in 2003, joined

with other local and foreign handset manufacturers in China to sign a pledge to
take back used phone/battery

Active support for China's bid for the 2008 Beijing Olympic Games: Motorola
actively supported Beijing for its bid t host the 2008 Olympic Games (Motorola's
communication equipment has-been used in seven Olympic Games).

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Recent Awards and Recognitions in China

1. Foreign Investor of the Year, 2003 awarded by CCTV as part of the television
network's Economic Leaders of the Year program. Motorola was the first corporation so
recognized.
2. 2003 Best Service with Innovation in Mobile Telephone Business(CCID)
3. In 2002, Fortune Magazine's Chinese Edition identified Motorola as China's best
global employer.
4. The Magazine's Chinese Edition also cited Motorola as the best among global
companies in China for

Its long-term commitment

Innovation

Adaptation to the local market.

According to company sources, Motorola wanted to become more Chinese than

the local Chinese companies. Explain the strategies adopted by Motorola to gain
popularity with the Chinese consumers. How far do you think those strategies
helped Motorola become a successful company in china.
Part I
The strategies adopted by Motorola to gain popularity with the Chinese consumers:Motorola has a principle that is Understand Chinese culture, pay respect to Chinese
conditions, does not be self- opinionated, do not always blame others
Initially Motorola adopted a four- point strategy in china that is

Investment/Technology Transfer

Management Localization

Local Sourcing

Joint Ventures/Co-operative Projects

Investment/Technology Transfer
Initially, Motorola set up a plant at a total cost of $120 million in the Tianjin
Economic & Technology Development area for manufacturing pagers, simple
24

integrated circuits and cellular phones. In the next phase of its investment of
around $400 million, the company built its second plant for manufacturing
automotive electronic, advanced microprocessors, walkie-talkie systems and
fabricated silicon wafers. In addition to its wholly-owned manufacturing plants
between 1995 and 2002. Motorola entered into nine joint ventures with Chinese
firms to expand its presence in the market and also increase its production
capacity. The joint ventures helped Motorola gain access to the Chinese market
without establishing additional manufacturing plants.
By 2001, the company had invested around $400 million in Joint ventures in
accordance with the Chinese government policy to boost foreign investment in
telecommunication equipment parts, Motorola invested heavily in the production
of semiconductors and mobile handsets. It also brought GSM technology to china
and analysts credited Motorola with introducing and popularizing this technology
in the country.
In the line of four-point strategy, Motorola invested in research and development
centers in China. In 1999, Motorola established the Motorola China Research &
Development Institute in Beijing. The company announced that its research center
would focus on technological development and innovation. Motorolas R & D
institute conducted research in the area of communication, software and
semiconductors.
Motorola employed around 650 engineers for its research activities in China. The
company also entered into research partnerships with Chinese university and
institutes.

Over the years, Motorola entered into agreement with two Chinese telephone
service providers China Unicom and China Mobile for installing telecom
networks across the country. It also provided GSM technology to the mobile
25

service vendors Hubei Mobile Communications and Eastern Communication Co.

Ltd
Though Motorola had a significant investment in the semiconductor business, by
the early 2000s, with the worldwide slowdown in the semiconductor business and
the China emerging as the worlds largest mobile market, the company started
focusing more on its mobile handset business.
Management Localization
Motorola not only established manufacturing plants in China, but also localized the
management. The company realized that in order to increase its market share, it had to
hire more Chinese employees. However, Motorola also realized that the Chinese
managers were not familiar with western management concepts and that the country
lacked managerial talent. Though the Chinese were good at basics they lacked practical
application of theories. Thus, Motorola established the Motorola University in 1993 to
train young Chinese people to take up global managerial positions. The mission of the
University was to train and develop world-class staff for Motorola. Motorola also
provided in-house training to its employees. The engineering recruits were sent to its
manufacturing plants in other countries like US, Singapore and Hong Kong for on-thejob training in designing and other high-tech manufacturing procedures. It also initiated a
career management program called Cadres 200. Under this, Motorola selected around 20
top employees for a leadership training program and posted them in Motorola
manufacturing plants across the world.
Sourcing Locally
To the extent possible, Motorola sourced components from the local Chinese players.
This reduced its cost and also complied with governments requirement that MNCs
working in China had to source a certain percentage of components from the local firms.
Motorola provided training to the local suppliers to improve their standards by extending
technological and managerial support. It also helped them to increase their productivity
and quality levels, and even assisted them to enter global market. Motorola also
26

encouraged its foreign supplier to set up plants in China. According to reports by, 2002,
around 45 Motorola suppliers had set up manufacturing in China.
In order to inculcate a competitive sprit among its Chinese suppliers, Motorola conducted
exhibitions. Such as Teaming for Excellence which allowed its suppliers to showcase
their talent and components. By 2002, Motorola had 176 direct suppliers and 700 indirect
suppliers and the usage of local components increased from 58.85% in 2000 to 65% in
2001.
Building an Image
Motorola also focused on building its brand among the Chinese. It installed glow signs in
busy market areas and placed advertisements in print and television to increase awareness
among consumers about the company. It was reported that due to its extensive marketing
the Chinese associated Motorola with quality and did not mind paying a premium price
for its products. The company also opened up Motorola exclusive showrooms in the upmarket areas such as Shanghai and Beijing offering latest mobile handset models.
Motorola also introduced a new retailing concept called Motorola Towns. These towns
were based on the Nike Town in the US and aimed at providing a unique retailing
experience to consumers. In Motorola Towns mobile handsets were displayed and
consumers could walk in and use various technological gadgets without spending any
money. According to company sources, the aim of Motorola Towns was to attract the
high end consumers With Chinese players competing on price and gaining a foothold in
the entry level, Motorola decided to concentrate on the high- end market. In order to
obtain visibility for its high-end products, Motorola adopted various marketing
initiatives. The company organized lavish launch parties for its mobile handsets, wherein
models walked down the ramp displaying the new Motorola handsets. Motorola also
sponsored local sports events to enhance brand recall among consumers.

27

Along with its marketing activities, Motorola concentrated on building its image as a
good corporate citizen in china. Motorola associated itself with Project Hope which was
initiated by the China Youth Development Foundation.
According to Motorola sources, from 1994, it provided financial aid to more than 9,000
children to complete their school education and constructed around 40 Motorola Hope
Schools in about 25 provinces.
To strengthen Project Hope, Motorola undertook a Motorola Hope Tour in which the
companys top executives visited underdeveloped areas in the country to learn about the
local conditions. Motorola also organized programs like Green China to protect the
environment in the country.
Motorola started feeling the heat by the early 2000s, when it saw its market share
declining due to fierce competition in the Chinese mobile handset market. In order to
increase its sales and market share, Motorola announced a new strategy in June 2002.
The 2+3+3 strategy
It is an evolution of the previous Four-Point strategy the company has stuck to for the
past 8 years. The new strategy can be explained as follows:
The 2 refers to building China into a world-wide manufacturing and R&D base.
The first '3' refers to three new growth areas including semiconductors, broadband and
digital trunking systems.
The second '3' refers to three $10-billion goals: annual production value to reach $10
billion by 2006, accumulated inputs in China to reach $10 billion by 2006; and local
purchasing to reach $10 billion in China within the next five years".
The core of the new strategy is the same as that of the Four-Point Strategy: Win-Win for
Motorola and China. Based on the new strategy, Motorola will continue to be a good
Corporate Citizen in China, to deeply root itself in China and to be integrated into the
China society.
Measures have been taking by all sectors to implement the 2+3+3 strategy. Motorola has
adjusted its worldwide manufacturing capacity and has shifted some production to China.
The company also decided to hire 4,000 more engineers and researchers and add 1 billion
USD in R&D to the existing 18 R&D centers.
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Part II

Due to its focused strategy in Chinese market, Motorola was the leader in the
mobile handset market with a share of 31% in 2000.

Motorola was successful in China due to its understanding of the market and the
people and because of the strategies it adopted. By 2003 Motorola was regarded
as the most successful as the strategies it adopted helped it to understand Chinese
culture, it paid respect to Chinese conditions.

By adaptation of four point strategy it was able to gain access to Chinese market.
It was able to localized the management. In order to increase its market share, it
hired more Chinese employees. As it established Motorola University in 1993 it
was able to train young Chinese people to take up global managerial positions.
Through this it was able to train and develop world-class staff. Through the
strategies Motorola reduced its cost and also complied with the governments
requirement that MNCs working in China had to source a certain percentage of
components from local firms.

Because of its strategies Motorola had 176 direct suppliers and 700 indirect
suppliers and the usage of local components increased from 58.8% in 2000 to
65% in 2001.

It was found that due to its extensive marketing the Chinese associated Motorola
with quality and did not mind paying a premium price for its products.

Motorola introduced several new concepts like Motorola Towns. Because of its
strategies Motorola was able to build its image as a good corporate citizen.

However, with increasing competition Motorola started experiencing a decline in its

market share and by 2002 its share was down to 28%. Hence Motorola was bound to
change its Recipe and announced a new five-year 2+3+3 strategy in June 2002.
If we examine closely the Share of Chinese Market in Motorola Global Markets then we
can find that in 1999 Chinas share in global Motorola revenues was 10% then in 2000 it
increase to 12% and then in 2002 it grew up to 14%. Hence it shows that the strategies it

29

adopted helped Motorola became a successful company in China. But it was limited up to
certain period.
In early 2003 Motorola experienced a slowdown in sales in China with the outbreak of
Severe Acute Respiratory Syndrome. While Motorola experienced a decline in its market
share, the local players had increased share to 20%. For the same period Motorolas sales
declined by around 58%.
It was found that the reason for its losing market share was excessive inventory, desperate
competitors and cut throat pricing.
Lastly it was suggested that as it was slow down of demand in urban areas mobile
companies need to focus more on smaller cities and rural areas.
MOTOROLA IN TROUBLE
Motorola was the pioneer of mobile phones, and was the top cellular phone company
in the world until the late 1990s, when it was overtaken by Nokia. This case discusses
some of problems that Motorola faced in 2006-2007, after it failed to follow-up the
success of its iconic phone model, the Razr, and was quickly overtaken by
competitors who launched innovative products to capture market share. Motorola
slashed the prices of most of its phone models in late 2006 to recapture some of the
lost market share, drastically affecting its margins in return. In early 2007, Motorola
announced that it would make an effort to revive its financial performance and not go
behind market share alone.
It also embarked on a business reorganization to better align its operations with its
customers and markets. However, it was widely believed that what the company needed
was a path breaking new product to pull it out of difficulties. But as of mid 2007,
Motorola had no products that looked likely to replicate the Razr's success. In addition to
this, CEO Ed Zander was losing much of the credibility he had earned in 2004-2005,
during his early years at the company, and speculation was rife that Motorola's board
might consider replacing him in the near future.

30

Issues:
The teaching objectives of this case are:
This case is meant for MBA/PGDBM students, and is designed to be a part of their
Strategy and Business Management curriculum. To appreciate the importance of
innovation

in

dynamic

environment

like

the

mobile

phone

industry.

To examine the reasons for the troubles facing a leading mobile phone company in
the

world.

To understand the risks in depending too much on a single successful product.

31

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