Umer Khalid

15E00042
MBA for Professionals
22-08-2015
Project 1
Management: Policy and Practice

Answer to Question No.1

Motorola was the first company to introduce handset mobile. It started the mobile
revolution as the company also produced communication equipment for cellular companies,
walkie talkies and semiconductor chips. The first hand held mobile phone was very successful
and set the base for innovative technologies but where Motorola failed was that it relied heavily
on its hand set rather than innovating upon it. As with technology the market is innovating
constantly and preference of consumers changes very fast Motorola failed to keep itself abreast
of these changes and missed key innovating point until the point that Motorola as a group started
showing losses.
The loss of revenues was due to not innovating enough but the question is why company
such as Motorola pioneer in introducing mobile handset failed to innovate and lost market share.
The answer is all this happened due to its company culture. The company had a very competitive
culture. It was good for inventing new technologies but this internal competition also led to
downfall of Motorola too. As the different business unit started competing with themselves
instead of collaborating which is required to innovate today. There were communication failures
within organization, also as different parts of a device was made by different business units so
due to absence of collaboration they were not effective or according to customers demand. The
end result of all this was that no new products were developed.
Galvin (CEO of Motorola) tried to restructure the company in 1990s but it also failed because
of the culture that people have ingrained. Most of the managers were stripped of their autonomy
and almost all important decisions were to be approved by top management which led to delays.
In 2004 Motorola spin-off its semiconductor business as it was showing loss into Freescale
semiconductors to lower the loss and focus on its core business. But even after spinoff the
Motorola losses didnt recover. Zander was appointed CEO in 2003 and he focused on consumer
and convergence and the world saw one of the best mobile phones called Razr. The Motorola
gained market share but still again the company culture came in front and after a few successful
stints there was no innovation. Motorola failed to channel revenues and include consumer
feedback into their product design. Motorola also missed many key trends and resisted 3G

communication and relied on its razr success. At last Motorola spin-off its mobile handset
business and spin off was completed 2009.
This spin off may help Motorola profits soar because Motorolas other businesses mobility
and broadband are profitable and after the spinoff may be the hand set business can be
restructured and become profitable. Another benefit of spin off is that the individual companies
can focus on their core competencies instead of assisting other business unit in a company.
Although Motorola have always been known by its handset but in my opinion it was good
decision to spin off as todays its the time of core competencies. Only those companies can
survive the competition that can innovate, focus on their competency, channel revenue
effectively back to product development and inculcate customer feedback to improve their
product.

Answer to question No 2
Today mobile phone is the need of everyone. We have seen such an emergence of electronic
communication unprecedented before. Even poor of Africa and south asia own a mobile. Mobile
device has become such a thing that everyone from rich to poorest people own them. Scientists
and sociologist count mobile communication as the most fundamental way to broadcast a
message for general public. In view of these developments the competition in mobile market has
also increase four fold.
In todays mobile device market innovation is the key. This is a market which is driven by
consumers and divided by price range. All mobile device manufacturing companies are
producing mobiles in different price range and when one company offers more features in their
handset than other companies the market share suddenly shifts in the favor of that company.
Recent example is introduction of Huawei Honor 3c and its latest model 4c in range of $200.
$200 was considered a range in which you can only get an entry level smart phone. The market
leaders just 9 months back were Samsung and Q mobile. But as the Huawei introduced their
incredibly fast and cheap phones in this range the market shifted in 6 months. People started
buying and recommending these phones to each other instantly. Such fragile is the mobile device
market.

As mobile phone technology is constantly innovating so the next disruptive competitor is around
the corner. In recent years we have seen many new entrants that have disrupted the market for the
good. For example Xiomi the Chinese mobile phone manufacturer is soon set to become second
largest mobile seller in just four years gaining on Samsung which have been in this market since
at least last 10 years. One plus one is another example that offers mobile phones as powerful as
Samsung or apple at half the price. Right now the queue for one plus 2 (new model of one plus
one) is around 3 million people. So they have sold 3 million handset even before they have
launched. So the competition in mobile device market is ruthless and consumer preference
change overnight. So companies face a lot of pressures which includes, price range setting,
manufacturing, core strength, target market of their phone etc. etc.,
A lot of mobile phones are available in market today. A lot of companies are offering different
devices for different consumers. Buyers have a lot of options when buying the device so in
todays world not only the power of device counts but also how that company advertised it and
how the consumer associates itself with the certain brand. These are important questions too. For
example a consumer can buy Huawei, Samsung, q-mobile, Motorola for the same price with
almost the same specs but he will go for Q-Mobile because a certain celebrity which is his
favorite has endorsed this phone. So in todays market emotions of the consumer also play an
important role too.
The manufacturers have to be smart too. As market selection and target market is very important.
If you offer a low specification phone to highly technical target market not only that mobile
phone market be affected but your brand would be damaged. No one will believe in your
marketing. For example Q-Mobile in Pakistan tried to break into high end market with Z4 but the
specifications as well as structure of mobile was good enough which affected its overall brand
and people who used its cheap mobile phone also stopped believing in it.
There is huge rivalry in mobile phone markets today. Companies can only survive if they
innovate and keep abreast of the changes in market and consumer preferences. Now every
manufacturer introduces their flagship handset once every year and other models at different
intervals in a year. Companies are introducing 40 different mobile seta a year. In this kind of
market what companies can do is focus on their core strengths rather than be swayed by market
they should focus and only produce in which they are the best. For example apple is the best

example of this. Apple is the only mobile manufacturer that produces the handset and also the
software. This is its core competency and it rules the world in high end mobile phone market.

Answer to Question No 3
Motorola faced a problem that it was too fragmented to compete in any one sector of products
they made. This was a failure of portfolio management. As Motorola failed to ascertain
communication policies between its different business units and also on what units to focus on.
Motorola was also unaware of its core strengths and key market trends.
Motorola could have divided its company into independent portfolios and then set policies for
collaboration and coordination between them. It could have focused on cash generating units
while keep funding the research and innovative units which didnt produced much cash flows but
were important for innovation and new inventions. As Motorola wanted to take whole company
forward with no focus what happened was that units generating cash and units generating
research were subject to same policies. Which led to no innovation and less market share.
Better strategic decisions could have been made as in my opinion the Motorola handset
business should have spin off much earlier than it did because mobile handset is big market in
itself and its rules doesnt not apply to any other business.
Companies should keep evaluating themselves constantly, testing them against markets and
competitors. Competition and collaboration are the new mantras n this fast changing world.
Todays dreams might be tomorrows reality. The company structure should be so that its
responds fast to market shifts and autonomy should be given at operational levels for better
innovation.

Answer to Question No 4
Motorola started off as electronics company over time it focused on communications equipment
of which semiconductors was a part. After the bubble burst of 2001 Motorola was too
fragmented to focus. As some of its business units were producing profits while other were in
loss. Restructuring has also done nothing good for the company but stopped innovation dead in

its tracks. Zander who took charge in 2003 troubleshooted the company and came to a
conclusion that Motorola is too fragmented to focus on its core strengths.
As today coordination and collaboration between people and business units is required more
than anything in a company Motorola was missing this. Motorola also missed consumer
feedback and key innovations that drive the market.
Todays managers have to be effective at coordinating and collaborative while keeping them
competitive if they want their organization to survive this tough market. They can achieve this
by looking at what the market wants, what consumers wants and then reverse engineering the
process. As without this they cannot fulfill their job requirements because one person cannot be
expert in all fields and they require inputs from other departments too. Only in this way manager
can innovate and gain market share. For managers there should always be a healthy competition
among themselves to have the best team but this should never compromise the communication
between different teams.
A company should have a clear communication policy and everyone working in teams and
leading teams should be on the same page and know companys goals, mission and vision. Only
in this ways healthy competition can exist and managers can do a good job.