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The company that I chose to complete my Strategic Analysis on is Motorola Inc... Many of us are familiar with Motorola products due to the advent of the cellular phones. Regardless of the carrier of the service, be it Verizon, AT& amp; T, Sprint, many of these companies use a cellular device created by Motorola. However, the company does much more than just producing cell phones. One area that Motorola is trying to focus its current strategic actions in the area of Semiconductors.
History/Financial Portfolio Motorola Inc. started with the founding of the company by Paul V. Galvin (figure 1). Paul and his brother Joseph E.
Galvin purchased a battery eliminator business from Stewart Storage Battery Company which made battery eliminators used in operating radios using household current in 1928 and created 'Galvin Manufacturing Company'. The company started with five employees and grew gradually. It expanded its business into automobile industry, by introducing auto radios sold to independent auto distributors and automotive dealers. With Galvin Manufacturing Company entering into the auto industry, Paul V.
Galvin coined the word Figure 1 'MOTOROLA' linking motion and radio. Daniel E. Noble joined Galvin Manufacturing Company in 1940 as Director of Research. As a pioneer in FM radio communications and semiconductor technology he originated the first hand-held two-way radio for the Connecticut State Police. He brought his designs to Galvin Manufacturing Company and developed a two-way radio system for the U.
S. Army Signal Corps. Because of this, Galvin Manufacturing Company played a significant role in World War II with radio and communications equipment like the "walkie-talkie" (figure 2) and "handle-talkie." The first public stock offering occurred in 1947. The company's name was officially changed to Motorola Inc. In 1948 Motorola entered into the television business and with more than 100, 000 of these TV sets sold in one year, Motorola catapulted into fourth place in the television industry. During the late 1940 's Motorola began to supply auto radios to Ford and Chrysler plants for installation in their automobiles.
Motorola introduced dispatcher radios by taking advantage of expanded allocation of radio frequencies and with aggressive marketing and a reputation for reliable equipment earned a leading role in the industry. Daniel E. Noble launched a Motorola Research and Development facility in Phoenix, Arizona. He anticipated the enormous potential of the newly invented transistor and helped Motorola became one of the world's largest manufacturers of semiconductors. By 1950 the net sales of Motorola was $ 177, 104, 669 and the number of employees had grown to 9, 325.
Unfortunately, in 1952, Motorola's first color television was short of success due to technical problems, a high price tag, and the failure of broadcasters to offer an adequate amount of color programming. The product was pulled from the market in 1956. Among some of the innovations for which Motorola is famous are a new radio communications product, a small radio receiver called a "pager" that delivered a radio message selectively to a particular individual carrying the device and the "Moral" with such low power consumption that radios in automobiles were able to operate without running the car engine Motorola was the first company to use epitaxial method to mass-produce semiconductors. It used low cost techniques in making silicon rectifiers, used in automobile alternators. In place of auto generators, the Automotive Products Division began producing alternators, inaugurating the company's role as a supplier of "under the hood" electronics. Motorola, in a joint venture with National Video, developed the first rectangular picture tube for color TVs and with Ford and Rca's designed and made 8 -track tape players for the auto industry.
Domestic and foreign auto manufacturers soon became customers for tape players and 8 -track players became the Automotive Product Division's second major product line. As the cost of semiconductors continued to decline, their application in consumer electronic products increased and created a new major market. Motorola responded with a full line of low cost plastic encapsulated transistors. The design of these devices was eventually adopted by the entire semiconductor industry. In 1967 the company expanded its international presence by adding six plants around the world.
Lunar roving vehicles used Motorola's FM radio receiver to provide a voice link spanning the 240, 000 miles between the Earth and the moon. It was 100 times more sensitive than any car radio. Motorola entered into the manufacture of components for battery powered quartz and between 1971 and 1979, the company gained critical experience in producing and supplying integrated circuits, quartz crystals, and miniature motors to manufacturers like Timex, Bonus and Bulova. The company introduced its first 6800 microprocessor (see figure 3), which used only 5 volts of power for the communication and business machines sector in 1975. In 1979 Motorola introduced its first 16 -bit microprocessor, Figure 3 the 68000. Capable of completing two million calculations per second, it used to run and write programs for scientific, data processing, and business applications.
In the 1980 's Motorola controlled the emerging U. S. market for cellular phones and pagers but they were not aggressively focused on competing with the Japanese, even after Japanese firms began to flood the U. S. market with low-priced, high-quality telephones and pagers. Motorola, finding itself, pushed into the background heard the call to battle.
Managers at first were not sure how they should respond, so they originally decided to abandon some business areas and even considered merging their own semiconductor operations with those of Toshiba's. After much searching they decided to fight back and regain the firm's lost market position. This fight involved two main strategies: Learn from the Japanese, and then compete with them. This strategy seemed to work as Motorola's revenues tripled from approximately $ 10 billion in 1990 to almost $ 31 billion in 1999. However, more problems started to arise. The 1996 - 99 bottom-line performance did not match its rapid growth and profitability during the 1990 - 96 periods.
One of the key issues facing Motorola was their weak financial position. Motorola had inopportunely chased the dot-com and telecom boom in 2000 and built up a manufacturing capacity and a global cost structure for a $ 45 billion revenue Martin Cooper demonstrates the first company going into 2001, but had achieved only $ 37. 6 portable cellular telephone. billion in revenue in 2000. Then the reality of 2002 hit: A telecom equipment downturn affecting both wire-line and wireless.
The worst semiconductor decline in history. Dot-com busts. A U. S. recession. Appalling terrorist acts.
Delays in the deployment of next-generation (3 G) wireless technology. Large customer default Sales of only $ 30 billion. Major and painful corporation-wide resizing. Financial charges. These are some of the reasons for the weak financial position mentioned in the 2002 annual report. However, if you analyze these reasons it would seem that the company was trying to take the blame away from Motorola's management and place it on external factors.
Some reasons alternate reasons might include: Rapid technology gains and product innovations by Motorola's rivals in wireless communications. Outdated management style. Lagging digital cellular phone technology. Motorola's focus on a wireless-equipment technology that only covered half of the U. S. market potential.
Poor quality and performance in some of its product areas (loss of customers). In an attempt to regain its market position, Motorola began innovations with the development of multi-media mobile devices using Mobile Extreme Convergence (MXC) architecture. With this innovative architectural change many of the current design limitations of affordable, advanced, full-featured mobile devices were eliminated. "With the Extreme Convergence architecture, Motorola's Semiconductor Products Sector has found a way to simplify the design of hardware and software and to reduce the cost of components for mobile systems. Motorola's technical and business strategy combines DSP and applications processor cores positioning the company to compete in a wide variety of applications that goes beyond traditional mobile devices and into consumer electronics. The rapid delivery of chips and platforms by Motorola for mobile and tethered applications will enable it to secure a solid share in an addressable embedded processors market that is expected to consume over 900 million chips by 2007. " (Max Baron, principal analyst, In Stat/MDR) Since the company's creation, Motorola's two key core values set the standard for its employees' actions. These core values are constant respect for people and uncompromising integrity.
The company also considered trust to be part of its competitive advantage. As Motorola developed into a global company it continued to uphold its ethical principles. However, the company realized that its values were contradictory to how business was being done abroad which resulted in Motorola practically committing "business suicide" by adhering to its ethical policies in countries where bribery and other business practices that are considered illegal in the U. S. were common and expected.
To combat the clash of ethics a group of retired Motorola officers were asked to look into the status of ethics understanding and compliance around the world. They created the Motorola Ethics Renewal Process (MERP). The chief purpose of MERP was to "help Motorolians at all levels in all countries make ethically appropriate business decisions everyday and to get them to take ownership and accountability for Motorola's key beliefs and ethical values" (Key, 2002). Local, country, and regional ethics committees allowed employees to openly discuss issues surrounding Motorola's key beliefs and the code of business conduct. Despite Motorola's unrelenting attempts to become an international, ethical company, it continued to face the problem of staying profitable and growing market share.
II. Analysis of Current Situation Industry Environment The largest market share in the communications industry is held by Nokia, with Motorola trailing in second place. In general, economic conditions in most global industries have hit a point of stagnant or declining sales. In today's world businesses need to somewhat accurately forecast the outlook for global economies and then make investments and decisions accordingly.
The communications industry is dependent on vendor financing and has taken a big hit because "[ve]not financing is an important part of the purchase decision for buyers. Vendor financing helps equipment makers capture large contracts even when capital is scarce while allocating carriers to build out their networks more quickly and cheaply" (web equipment. htm). Due to main reliance on vendors the communications industry has substantial risks so f Nokia and Motorola do not stay ahead of the cable companies in technology their position in the market will be highly threatened. "The biggest threat to telecommunication hardware vendors may be the growing clout that cable companies have with high speed Internet access using cable modems" (web equipment. htm).
Communication hardware companies are benefiting from "worldwide deregulation in telecommunication services and intense competition among industry players" (web equipment. htm). Deregulation of the industry gives companies more freedom in their decision-making processes. In addition there is intense pressure and demand for emerging technologies. Communications hardware companies need to ensure that their products are compatible with the newest features. Many are trying their best to differentiate their product from their competitors with features including voice mail, two way text messaging, e-mail capability, digital photography and Internet access.
The competitive advantages in this industry come from making versions of these features superior to those of the competition. With that in mind the industry is experiencing a transition from copper wire to fiber optic transmission. Due to the high costs of installing fiber optic cables it will take years for the global markets to become saturated. This change in the industry includes benefits such as "voice, data, video, and text over the same line.".. and "fiber optic cable does not suffer from signal distortion and degeneration" which "copper wire suffers from" (Johnston, 2002).
Operating Environment Mo...
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