Motorola Company was formed in the year 1928 by Paul and Joseph Galvan manufacturing after acquiring battery eliminator operations. The Company produces electronics like radio, television, cell phones and iphones. Motorola Company is faced with various salient external opportunities and threats just like any business. The success of any company is dependent on how well it scans the external environment and how it adapts to these conditions by determining the threats and opportunities (Billington and Fleming, 1988).
Opportunities are the conditions that can enable a business to introduce new products thereby giving the company a competitive edge. To begin with Motorola has technological opportunities. With the introduction of new technology, Motorola will be in a position to improve the production of new products by introducing new production lines. Again, technological changes should be incorporated in the production of the existing products. Advancement in technology leads to the reduction in costs.
The second opportunity that Motorola should embrace is the market growth. The size of the existing market e.g. far cell phones is fast growing. This growth will result into an increase in the demand for the products. With this, the company can be in a position to expand its production and segment its market to cater for the diverse needs of the customers. The level of literacy of the market has also impacted on the rise of the customer base. The products must meet the global requirements of the customers.
On the other hand there are various threats that face the Motorola business. Threats may result into the termination of a business or the decline in the level of returns (Evans, 1990). If not well scanned, the company will not realize its major objectives. The first threat that is likely to influence the operations of the business is competitors. Some of the competitors in this business are Nokia, Samsung, Sony Ericson, mobile communication, LG electronics and apple Inc among others. Competitors must be closely monitored for the success of the business to be enhanced. Since there is competition for the same market, the competitors will demand a wide share of the market. It should also ensure the products it makes are of a superior quality so as to retain its customers. It must also produce new products ahead of the competitors for turnover to increase.
Teece (1988) observes that with the changes in the policies of the government, the operations of Motorola will be affected. According to Lamb, R. B. (1984), the company must therefore monitor the changes and ensure compliance with the legal provisions.for example the government may regulate the broad band width or the allocation of waves to the respective radio station. Policies like the minimum wage and the technological laws must be adhered to. Quick and drastically technological changes will result to the obsolescence of the current technology which might have cost a lot of resources (Teece, 1988). The company must therefore evaluate the level of adaptability of the existing technology should there be changes. Technological changes as well results into the loss of market of the products which were produced with the use of the previous technologies.
Motorola has some strengths and weaknesses in its operations. The first major strength of the company is the several large customers. The customers determine the level of demand for the company’s products and the revenue size. Since Motorola has several large customers, it will be in a position to sell the products effectively. Some of the customers are home network customers, enterprise mobility solutions and sprint Nextel among others. Further the customers’ have been segmented making the company be in a position to smoothen their sales in circumstances where one segments sale has been adversely affected. Evans (1998) asserts, that the customers are from different geographical boundaries has enabled the business to reduce the economic impact should there be economic shocks in one particular region.
The company also has strength in the product diversification. Since the company produces different products e.g radio, motor, televisions and mobile phone, it has been able to diversify its risks. With this kind of diversification, the company has been able to avoid the risks that might lead to huge business losses. For instance, the decline in the sales of radios has been accompanied by the rise in the mobile telephone market. Moreover, the large scale production has led to the economies of scale production. This will reduce the unit cost of production which in turn reduces the price at which the company’s products are sold. An economy of scale has also enabled the company to adopt the fast changing technology and attract expertise manpower. The strength has made the company to compete relatively well with its competitors and retain its share of the market.
Motorola Inc has also realized a decline in its turnover and its profits in the year 2007. These declines in the performance have been pegged on the weaknesses the company faces. For first, the company has some inputs that are only supplied by one supplier. Since these inputs are indispensable, the fact that they can only be supplied by one supplier increases the risk should there be a delay caused by increased lead time. If this occurs the customers will experience shortages and destroy the goodwill of the business. As well the delay caused by the supply of these products will hamper the production schedule halting the firms operation. The suppliers are also sometimes constrained with the large demand of inputs which might further lead to more shortages.
Secondly, the company has a weakness in dealing with credit issues. Credit extension by the suppliers of a business enables the business to continue in operations even before payment for the production factors (Billington and Fleming, 1998). The poor credit terms and policies have led to the inadequate supply of input materials in circumstances where the business cannot make cash purchases. This will further affect production and is therefore cause market shortages.
Poor financial performance also hinders the performance of Motorola. Due to these, the company realized decreasing turnover in 2007 from 42.8 billion to 36.7 Bn dollars. The decline also led to the fall in operating cash flow from 4.3, 3.5 and 785 million from 2005 to 2007 respectively. Such poor performance is attributed to the reduction in the market share and the high employee turnover. With loss of employees the continuity of the business together with the secrets in management can be leaked to the competitors (Evans, 1998 and Levinson, J.C.,1984). The constant changes in the board of management are also to blame. Due to this, the company must be in a position to correct the declining turnover if it has to realize continuity.
Motorola has therefore come up with strategies to assist in realization of improved performance. One of the business strategies is the spinning off mobile devices segment to be independent. With this the mobile devices segment will gain autonomy and have a different management. This will be advantageous in the sense that there will be customization in its operation and it will also have a small effective management. However, the mobile device segment is dependent on the production of the mobile set and therefore it’s likely not to be autonomous. Again, the different management sectors will lead to the duplication of the management cost hence reducing the business income. The economy of scale is also likely to be lost with this kind of a strategy.
The second strategy is to have a direct understanding of the customers. The direct understanding of the customers will lead to production of the consumer oriented goods and this may increase the turnover. This will as well enhance the customers loyalty tops the business. The strategy suffers the drawback of high cost of directly marketing due to the widespread of the market. The other strategy is to upgrade the product cycle and initiate operational changes to cut costs by reducing the jobs from 3000 to 2000.withb such a strategy there will be increased income and better production method. On the contrary, it is a method that is likely to be against the government labor laws and at the same time will need much compensation for those to be retrenched.
The strategy of investing heavily in the newly developed wi-max technology faster speed data transmission i.e. 5 megabytes per second and covering a radius of 20 miles should be welcomed. This strategy Well be in line with the improvement of customers needs and the competitive advantage over the competitors. The cost must be considered in order not to reduce income. Other strategies are the reduction on emphasis on the European market and the partnership with Google. The reduction in European market is likely to decline the turnover. Diversification strategy will lead to the mitigation of risks and should thus be pursued. The business should only purchase only the viable business units.
The company strategies can be achieved by designing a better organizational structure to meet the demands. THE structure of the company should be designed in a manner that encompasses the global nature of the business. The top most management level should be the president who supervises the performance of various regions headed by the vice presidents. Next in the chain of command should be the regional managers headed by the vice presidents. They will be responsible for the operations of the regions to ensure better performance and to enhance customer satisfaction.
Research and development department which is charged with the development and the improvements of a new product is also necessary (Arora, Fosfuri, Gambardella, 2001). This department will enable the organization to come up with new products desired by the customers. It will also incorporate the technological changes in the design of the products. Other departments are the finance department which will look into the sources of funds and the credit terms of the suppliers. The department will also look into the way of smooth the financial risks. The organization should also have the human resource department, marketing department and the administration department to coordinate the administrative issues.
The way forward for Motorola is to enhance its efficiency and scan both the internal and external environment if it is to survive in the future. Competitors monitoring is a mandatory requirement for the business continuation (Berry, L., 1995). If these are looked into the performance of the company will be improved.
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Evans, P. (1998), How deconstruction drives de-averaging. Boston: Boston Consulting Group Publications.
Lamb, R. B. (1984). Competitive strategic management, Englewood Cliffs, NJ: Prentice- Hall.
Levinson, J.C. (1984). Guerrilla Marketing, Secrets for making big profits from your small business. New York: Houghton Muffin Co.
Teece, D. J. (1988). Technical change and the nature of the firm’, in Dosi, G., Freeman: Technical change and economic theory. London: Oxford University press.