Introduction
Motorola markets and produces services, products, and applications related to communications, information, and entertainment. Its network is supported through broadband embedded systems and wireless networks. The company operates three segments: home and network mobility solutions, network and enterprise mobility solutions, and mobile devices.
Motorola is well known for its pioneering role in WiMAX 802.16e, a technology glorified for its great efficiency and flexibility. Motorola operates in a highly competitive industry, which calls for commanding strategies to defend its market share and profitability. The latest financial information shows that the company was undergoing one of the most trying moments since its inception because of the economic crisis that crumbled its profitability (Drucker, 1994). This paper aims to analyze Motorola Company’s case, explore its SWOT, examine different aspects of its strategy, and recommend a way forward.
Motorola’s’ Threats and Opportunities
Motorola operates in an industry that is full of opportunities. All it takes is for the management to come up with good strategies, given that there are enough resources to implement them. A case in point is whereby the company can decide to broaden its range of products so as to capture wider market share. Notably, Motorola has a global presence which makes it even easier to enter new markets that have not yet been exploited. For example, the company can establish its presence in Asia where mobile technology industry has not reached maturity, and where market is growing fast. The company has a potential for improving its reputation and brand name through innovation and product improvement. Increased marketing and promotion efforts can help popularize the company’s brand and products (Jay, 2006).
Despite scores of opportunities that are up for grabs, Motorola may not be able to exploit its full potential because of the limitations that comes from the external forces. The most threatening are Motorola’s competitors, who have established strong grounds in the market, and are strong financially. Some of them include wireless handsets, Nokia, Sony Ericson, and LG Electronics. Indeed, some of these companies conduct promotions which are superior to that of Motorola. It is also worrisome to notice that Motorola can only obtain some of its inputs from a single supplier as mentioned by the chairman when he says “in 2003 and 2004, Motorola suffered from product delays due to supply shortages caused by a lack of a sufficient number of suppliers” (Hitt, Ireland, & Hoskisson, 2011, p. 228). The economic crisis that the industry is undergoing currently is likely to constraint its suppliers financially and hence exacerbate shortage and delay of supplies. Also very threatening to Motorola’s market is the fact that the cellular market has almost reached maturity, and hence the sales are likely to slump.
Motorola’s’ Strengths and Weaknesses
Motorola has a strong brand name, which is known across the world. This improves marketability of its products as most customers associate strong brand names with superior quality of goods and services. The company has positioned itself in the market as an innovator and hence able to guard its market leadership. In all its three divisions, the company keeps unveiling new products from time to time, with virtually all of them succeeding in the market. Its global market coverage improves its revenues and market share. Besides covering a range of target markets, the company is able to pursue its low cost strategy as its cost of inputs is relatively low (Drucker, 1994).
Motorola’s internal environment does not lack some constraining factors. In some instances, Motorola tends to release to the market, products which do not go down very well with the customers. This includes products which are detected with faults, hence causing customer dissatisfaction and abhorrence of Motorola as a brand. The fact that Motorola’s employee training and education policy is not given the attention it disserves is a notable weakness, especially considering that it’s innovative and product improvement strategy, which is very critical, requires highly qualified and skillful manpower.
Advantages of Motorola’s strategic options
During the time of this analysis (2008), the company is experiencing serious financial ordeal as a result of global economic crisis. Some of the company’s strategic options that are viable will restore its profitability. Disassociating the mobile devises segment from its mainstream will generate a number of benefits, which are evidenced by the chairman’s comments that “creating two industry leading companies will provide improved flexibility, more tailored capital structures, and increased management focus – as well as more targeted investment opportunities for our shareholders” (Hitt, Ireland, & Hoskisson, 2011, p. 228). Increasing efforts in understanding the customers’ demand will help the company improve its products so that the company can remain relevant in the market. Making the company leaner will relief the company from straining its budget due to excessive salaries expenses, especially considering that it is undergoing trying financial moments. Reducing emphasis on the already saturated European market will give the company an opportunity to concentrate on the less exploited markets from the developing countries. Low cost strategy will attract more customers, especially during this time of financial crisis when many consumers try to increase the value of their money. Finally, venturing in to a new and innovative technology such as WinMax is certainly one of the strongest selling points for a company in this industry as it will enhance its competitiveness.
Disadvantages of Motorola’s strategic options
The strategic options that have been proposed for Motorola do not lack some challenges. Cutting off some top management staff from their job is really counterproductive, especially considering the number of years the company has spent training them. Indeed, the company is likely to lose employees with crucial skills. If absorbed by some of its competitors, then it will be very threatening for Motorola. Lessening emphasis on the European market is likely to work against the company because the competitors might get a chance to consolidate their market out there. Finally, the company proposes to reduce cost, a very risky move indeed. This is because the company’s profit margin is likely to reduce substantially, especially if the cost of inputs does not go down as well – the worst will happen if the inputs become more costly in future (Drucker, 1994).
Corporation’s strategy, organization structure and strategic issues
Motorola is structured in three divisions, that is, home and network mobility, enterprise mobility solutions, and mobile devices. Making mobile device division independent will go a long way in helping the management to focus on more specific products, hence easing and enhancing strategy formulation. The staff and the management will also be able to specialize in those divisions they are more productive. In a bid to relief the company from excessive burden on salaries expenditure, the company can reduce the number of staff at the managerial level. Also, excess workers who work in loss making or less profitable divisions can be cut off (Drucker, 1994).
The way forward for Motorola
Agreeably, Motorola is undergoing a challenging moment, especially due financial crisis and perhaps stiff competition from its rifles. However, these reasons are not enough to make the management relent on its strategy. The management should continue with its efforts of keeping abreast with what the customers really want. The central idea is to focus on the customers, as they are the ones who will deliver the company from its current challenging position. Most importantly, the management should continue keeping pace with the technology that the consumers seems to desire. The Chief Executive Officer together with the top management should harness the company’s reputation and the company will reap abundantly in future (Hamel, 1994).
References
Drucker, F. P. (1994).Managing in Turbulent times, 3rd ed. London: Heinemann Ltd.
Hamel, G. (1994). Competing for Future. Harvard Business Review, 31(4), 23-30.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic management: Competitiveness and globalization, concepts and cases. Mason, OH: South- Western Cengage Learning.
Jay, B.B. (2006).Gaining and Sustaining Competitive Advantage, 2nd ed. New Delhi: Prentice Hall.