Salient Opportunities and Threats in Motorola’s External Environment
Motorola has had several opportunities for growth. Some of these opportunities have been successfully utilized while others have been disappointing. In 2007, the company sought to venture into the production of gadget’s that could utilize the internet and wireless technologies. It also saw opportunities in offering devices that could use mobile computing and advanced data capture. These opportunities had targeted to increase its product portfolio.
During the turbulent financial times when its suppliers were constricted to, do business, Motorola saw this as an area of expansion. It took this opportunity to incorporate its suppliers in designing and production of its devices. This initiative, not only made; the suppliers more successful but also increased delivery of products at a lower price. However, Motorola has had several threats and challenges. The biggest external threat to Motorola’s existence is its competitors.
Nokia, Sony Eriksson, Apple Inc., LG., Samsung, and Helio have continuously eaten it not only Motorola wireless devices market. They have introduced better products and technologies that have made Motorola’s product loose market value. Samsung introduced LCD technology for its mobile phone handsets. Sony Eriksson introduced handsets that could offer multimedia and user personalized services. Apple Inc. and Nokia were also able to introduce touch screens and smartphones.
Because Motorola could not easily adapt to these technologies, its market share has been consistently threatened. Its competitors also entered into strategic acquisitions and partnership with other firms the o expand their businesses into previously Motorola monopolized markets. As a result, the competitors have not only edged it out of it’s established but also penetrated emerging markets in Africa, Asia and South America faster than Motorola. (Hitt, Ireland & Hoskisson, 2011).
Motorola’s Prominent Strengths and Weaknesses
The 2007 Motorola restructuring of Motorola’s product portfolio created threes distinct product categories namely Home and Network Mobility, Enterprise Mobility and Solutions, and Mobile Devices. It then enlisted some of the world largest communication solution providers in Asia, Europe, and America as its main clients. These are Verizon, Sprint Nextel, AT&T, China Mobile, and American Movil, who make returns of up to 42% of its mobile phone sales. It also supplies phones to Home and Mobility Networks such as Comcast and Sprint Nextel. This category of clients turns up 43% in sales. Lastly, from its provision of Network Mobility and Solutions to the American government, Wal-Mart IBM, Motorola realizes a turnover of 19% in this segment.
Its operation has not been without weaknesses. Motorola has failed to maintain a niche in the mobile phone devices market. Some of its products have performed so poorly compared to devices from other major competitors like Nokia. Some products such as MING smartphone and Q have made disappointing returns and failed to replicate the success of its earlier device RAZR. Another of its operational weaknesses is its reliance on only one company to supply raw materials.
The result is that, when it experiences delays in delivering raw materials, the supply of the finished product is also affected. Due to the financial instability between 2000 and 2008, Motorola’s major suppliers were incapacitated to do business. Lastly, Motorola has recorded a downward trend in its overall financial returns from 2005 to 2007. This has to weekend its ability to compete effectively with established firms like Samsung and Nokia (Hitt, Ireland & Hoskisson, 2011).
Advantages and Disadvantages Associated With Motorola’s Strategic Options
The threats and poor performance have lead Motorola to design several business revival strategies. Spinning off has been the most popular strategy. It involves making the mobile phone segment into an independent company. The advantage of this is that it will create more organized and flexible management that will increase investments opportunities. However, this very shaky strategy cannot stand turbulent financial time.
The company also proposed to implement some changes in its operational structure and do job massive job cuts. Three thousand employees, two-thirds of them in the mobile phone sector will be put up for compulsory retirement. While this measure minimized the company’s operational cost, it exposed the company to the other risks such as a huge retirement compensation that might leave the company in dire financial constraints.
The company has also ventured into the novel WiMax technology, which has been hailed as the technology of the future. This technology enables the high-speed transfer of data, up to an estimated 5 MB/s and works within a radius of up to 20 miles. It collaborated with Vietnam Datacommunications Company to start a test program. Venturing in WiMax is a good effort as it guarantees future business. While this venture is commendable, Motorola should focus its effort in rapidly growing markets such as China, Latin America, and Africa.
Lastly, Motorola has been leading in the manufacturer of devices that can use several operating systems. However, in the recent past, it has limited the number of operating systems in its mobile phone devices to P2K, Window Mobile and Android. The disadvantage with this is that P2K only operates on lower end consumer mobile phones.
However, it has entered into a partnership with Google to use Android Operating System to manufacture handsets that can support the use of social networking sites such as MySpace, twitter and facebook. This will create a very stable market for its products especially with the youth and young adults who are consistent users of such services (Hitt, Ireland & Hoskisson, 2011).
How Motorola Can Solve Its Strategic Issues
Motorola’s survival strategies are workable but riddled with weaknesses. They need to be re-designed to address the needs of the current markets. The biggest challenge with Motorola is that it has not been able to keep up with technological changes in the modern world. This has resulted in products that play second fiddle in the market. It should, therefore, direct its efforts toward constant research on the latest and future market trends and technological advancements.
This will help it to make devices that not only meet customers’ needs but also exceed them. The Company has done well to invest in the latest WiMax technologies. However, it needs to make devices that support the use of other new technologies such as 3G. These devices will find a ready market.
Motorola should also avoid being over-reliant on the European market and ventures into new markets such as Africa, Asia, and Latin America, which have been credited with tremendous growth in mobile phone technology in the last one decade (Hitt, Ireland & Hoskisson, 2011). This growth will not be realized; however, if Motorola does not change its organizational and management structure. It needs to implement Total Quality Management, TQM.
TQM involves the harmonization of all business activities in Motorola that will ensure very high-quality products and services. This is achieved through a continuous process of appraising and upgrading the entire human resource. The notion of high quality changes continuously so there should be continuous efforts to improve the quality of products and service that Motorola offers. TQM spreads to all aspects of the firm from the people, culture, business processes and environment.
All employees function as a team, ensuring the highest level of quality is met from the first level of production to the last. This model makes sure that every member of staff, from the company’s executives to the subordinates are part of quality assurance. Rather than focus on the mass production of goods, TQM relies heavily on customer feedback to manufacture goods that satisfy their needs.
Therefore, Motorola will need to collect as much information as possible from its customers, which will inform the kind of products it will manufacture (Encyclopedia of Business, 2011).
How Should Motorola Proceed?
Motorola’s future is full of uncertainties. Thus, it needs to proceed with a lot of care and reestablish itself as a reputable wireless device maker it once was.
The management should decide the specific products Motorola will produce to resume a successful business operation (Hitt, Ireland & Hoskisson, 2011). This will not be realized if there are no drastic changes at Motorola. The changes will begin with the adoption of Total Quality Management. TQM concerned with the satisfaction of customers’ needs. Motorola will result in effect manufacture high quality and desirable products (Encyclopedia of Business, 2011).
Motorola should also proceed with speed to incorporate the latest technologies in its mobile handset. Lastly, strategic acquisition, business partnership and enlisting of more dealers will be fundamental growth opportunities for this company.
Reference List
Encyclopedia of Business (2011). Quality and total quality management. Reference for Business.
Hitt, M., Ireland, R., & Hoskisson, R. (2011). Strategic management: Competitiveness and globalization, concepts and cases: 2011 custom edition (9th ed.). Mason, OH: South-Western Cengage Learning.