Motorola, Inc.

Former type Public

Industry Telecommunications

Fate Divided into Motorola Mobilityand Motorola Solutions

Successor Motorola MobilityMotorola SolutionsFreescale SemiconductorON SemiconductorArris Group (General Instrument)Cambium Networks

Founded September 25, 1928

Defunct January 4, 2011

Headquarters 1303 East Algonquin Road,[1]Schaumburg, Illinois, United States

Area served Worldwide

Key people Gregory Brown(CEO and Chairman-Motorola Solutions)[2]

Products Tablet computersMobile phonesSmartphonesTwo-way radiosNetworking systemsCable television systemsWireless broadband networksRFID systemsMobile telephone infrastructure

Total assets  US$ 11.851 billion (2013) [3]

 US$ 12.679 billion (2012) [3]

Number of employees 40,000 (2014)[4]

Website www.motorola.com

1

INTRODUCTION

The case examines the strategies adopted by the US electronics company, Motorola, in

China. It focuses on Motorola's initiatives in the Chinese market to establish itself as a

major brand. The case provides detailed information on the four-point strategy adopted

by Motorola in China and the results of the same.

The case throws light on the increasing competition in the Chinese mobile handset

market and the reasons for Motorola changing its strategy. The case also deals with the

impact of SARS on the market and the future prospects of Motorola in China. The case

provides detailed information on the Chinese mobile handset market.

Motorola Mobility, owned by Google, is breaking through the barriers that separate

people from the things they love. We're designing technology that connects seamlessly so

consumers have the best content at their fingertips, every second of every day. TV, talk,

text, email and web surfing – we're putting people at the center of it all. It's what we call a

Motorola Powered future and we're making the devices that do more, so people can do

more.

2

REDEFINING MOBILITY

1984. It was a big year for mobile technology, a turning-point year, because the very first

commercial portable cellphone rocked the world. DynaTAC. The Brick Phone. It was the

device that ushered in the mobile phone era that has come to define who we are today.

And it was invented by Motorola.

Cellphones have changed a lot since then, but Motorola's innovative spirit is as strong as

ever. It's what keeps us developing products that transform our customers' lives, making

them easier, smoother and more enjoyable. Our portfolio includes the most amazing

devices on the planet. Like our blazing-fast Android™ powered smartphones, led by the

acclaimed DROID by Motorola family of products.

Recently, we improved upon a legend when we introduced the next generation Motorola

RAZR™. Rail thin, lightning fast, Business Ready with air-tight security, and never-

before-seen software innovations—DROID RAZR by Motorola brings all the pieces of

busy lives together in one beautiful device.

For fitness junkies, we developed MOTOACTV™ – a ground-breaking training system

that is both a motivating personal trainer and DJ in one lightweight device. It records and

charts your workout data so you can attach numbers and progress to the sweat you've

spilled, but it also learns which songs pump you up most and creates personalized

playlists to push you beyond your limits.

And let's not forget our stunning tablets, crystal-clear hands-free headsets and inspired

accessories that make life on the go as rich as possible.

Our customers are addicted to their Motorola products. Why wouldn't they be?

Combining technological advances with exceptional design, our devices give them the

freedom to do more.

3

MORE THAN DEVICES

As our home and mobile lives converge, Motorola Mobility continues to invent

technology that serves consumers' digital needs and make life easier.

Take SMARTACTIONS™. It's an app ready to take over changes so users have less to

think about in a day. Who doesn't get concerned with battery life once in a while? With

SMARTACTIONS that's one less worry because it can automatically change settings to

optimize power. For those people that always forget to kill the ringer at work,

SMARTACTIONS can remember to do it for them. It's the app that keeps an eye on the

phone, so users can focus on more important things.

Or check out MotoCast™, the app that lets users sync, store and access the stuff stored on

their home computers from their smartphone, tablet or even another computer. Users can

get instant access to entire libraries of photos, music, videos, documents and more

whenever they need them wherever they are.

We understand that it's not just about devices, it's how those devices can be used. So get

ready for more breakthroughs… and more connection.

HOME: WHERE CONSUMERS RULE

Once upon a time TV was king and people just watched what was on. Today, it's a

different story. Consumers demand total control over their content. They crave the

ultimate personalized experience: shows on any screen, in any room, at any moment.

They want a TV that practically mind-reads what they're itching to see next. Broadband

blazing enough to keep up with their fast-action games. And the power to control what

plays at home, even from far far away. In a word, it's all about more. More access, more

content, on more devices, in more places.

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We're empowering them with just that. Mobility's Home portfolio includes video and

voice and data solutions to lead the way for greater convergence than ever before. We're

pioneering technologies that let consumers personalize their home entertainment

experience and sync intuitive media across multiple screens. (Think the world's first-ever

digitally-assisted living room.) By blazing new video gateways, we're exponentially

expanding access to content everywhere, bringing the home and mobile space closer

together. The benefits of this next-generation home ecosystem are practically endless.

For service providers, it can be daunting to keep up. Fear not. We have the lightning-

quick software and iron-clad security to help providers stay on top while thrilling

consumers and keeping connections safe. Using our Medios software, consumers can

sync streaming content between devices, anywhere, at any time. So social media junkies

can use Facebook® to keep in touch with their friends while sharing content of all kinds,

perfect for those are-you-seeing-this?! moments. While the socially conscious can use

our 4HOME cloud technology to monitor which appliances are consuming the most

energy in every room. It's a jaw-dropping opportunity for the industry, and our flexible

portfolio of Motorola Home products is leading the revolution.

People are looking for a new era of convergence, and Motorola Mobility products are

leading the way. We're designing mobile devices, wireless accessories and video

gateways to connect people and enrich their lives in ways they haven't even considered

possible.

Innovation that puts people on top – at Motorola Mobility it's our driving passion, and we

do it better than anyone else.

5

HISTORY

Motorola started in Chicago, Illinois, as Galvin Manufacturing Corporation (at 847

West Harrison Street)[12] in 1928 when brothers, Paul V. and Joseph E. Galvin,[13]

[14] purchased the bankrupt Stewart Battery Company's battery-eliminator plans and

manufacturing equipment at auction for $750. Galvin Manufacturing Corporation set up

shop in a small section of a rented building. The company had $565 in working capital

and five employees. The first week's payroll was $63.

The company's first products were battery-eliminators, devices that enabled battery-

powered radios to operate on household electricity. Due to advances in radio technology,

battery-eliminators soon became obsolete. Paul Galvin learned that some radio

technicians were installing sets in cars, and challenged his engineers to design an

inexpensive car radio that could be installed in most vehicles. His team was successful,

and Galvin was able to demonstrate a working model of the radio at the June 1930 Radio

Manufacturers Association convention in Atlantic City, New Jersey. He brought home

enough orders to keep the company in business.

Paul Galvin wanted a brand name for Galvin Manufacturing Corporation's new car radio,

and created the name “Motorola” by linking "motor" (for motorcar) with "ola" (it was a

popular ending for many companies at the time, e.g. Moviola,Crayola.).[15] The company

sold its first Motorola branded radio on June 23, 1930, to H.C. Wall of Fort Wayne,

Indiana, for $30. The Motorola brand name became so well-known that Galvin

Manufacturing Corporation later changed its name to Motorola, Inc.

Galvin Manufacturing Corporation began selling Motorola car-radio receivers to police

departments and municipalities in November 1930. The company's first public safety

customers (all in the U.S. state of Illinois) included the Village of River Forest, Village of

6

Bellwood Police Department, City of Evanston Police, Illinois State Highway Police, and

Cook County (Chicago area) Police.

Many of Motorola's products have been radio-related, starting with a battery

eliminator for radios, through the first hand-held walkie-talkie in the world in 1940,[18] defense  electronics, cellular infrastructure equipment, and mobile phone

manufacturing. In the same year, the company built its research and development

program with Dan Noble, a pioneer in FM radio and semiconductor technologies, who

joined the company as director of research. The company produced the hand-held AM

SCR-536 radio during World War II, which was vital to Allied communication. Motorola

ranked 94th among United States corporations in the value of World War II military

production contracts.

Motorola went public in 1943,[20] and became Motorola, Inc. in 1947. At that time

Motorola's main business was producing and selling televisions and radios.

7

FUNCTION OF MOTOROLA

Real-Time Analytics: Executive-style dashboards, roll call, trendcasting, heat maps, area

breakdowns, crime-type analysis, time of day/day of week analysis and more.

Robust, Sharable Reporting: Create ad hoc or scheduled reports and graphics custom to

your organization’s needs and send them to any email recipient.

Data Quality and Validation: Eliminate common data entry errors such as mismapped

and misclassified crimes. The Data Quality and Validation (DQV) tool includes built-in

notifications regarding data fidelity, click-to-correct mismapped crimes, and rule

assignments to ensure mismappings are fixed and prevented in the future.

Interjurisdictional Data Sharing: Interjurisdictional Data Sharing is a premium module

for CommandCentral Analytics. It gives users the ability to compile, review, and analyze

data across two or more law enforcement jurisdictions at the same time. Switching from

your agency’s data to all shared data is as simple as the click of an on/off switch.

Shape File Support: Segment your policing jurisdictions into separate beats or zones in

order to provide staff with crime map reports detailing the criminal activity that occurred

during their off time.

Unlimited Custom Analysis Tabs: In addition to five preconfigured views, users can

create an unlimited number of custom analysis tabs each allowing them to customize

their preferred layout, what information they want to see, and how they want to see it.

Full Narrative Case Reports: There are no restrictions on narrative length so you get a

more complete and detailed understanding of incidents.

Vendor Agnostic: Integrate CAD and RMS data from any existing vendor.

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Device Agnostic: Work seamlessly from desktop to mobile, regardless of device type or

operating system used.

Integrated Citizen Camera Registration: Enlist willing citizens to assist your crime

fighting efforts by securely identifying and registering the location of their residential or

commercial security cameras. As users sign up, providing their contact information,

camera information, and location, the information will automatically be available to you.

Whenever there is a crime, you can access the list of registered cameras and contact the

owners, saving you time and effort during emergency responses and investigations.

Two major Issues of case is :

The strategies adopted by Motorola to gain popularity with Chinese consumers.

How far those strategies helped Motorola become a successful company in China.

9

REVIEW OF LITERATURE

COMPANY OVERVIEW

Motorola Inc., a global leader in offering integrated communication solutions and

embedded electronic solutions, was founded in 1928. From its humble beginnings

making rectifiers and mobile radios, Motorola grew up in the 1940s and 1950s, and in the

1960s, it began to develop overseas markets and gradually became a global company.

Currently Motorola has over 95,000 employees across the globe, and its business covers

wireless communications, semiconductors, automobile electronics, broadband and

Internet access products. Motorola is a technology leader in the fields of mobile phones,

pagers, two-way radios and commercial GSM and CDMA systems. In 2002, Motorola

had a total sales volume of US$ 27.3 billion. Mr. Christopher Galvin is Chairman and

Chief Executive Officer of Motorola Inc.

Review of the related literature is one of the first steps in research process. It consists of

summary of findings of research carried out in the past on same directly and indirectly

related topics. This review provides insight to the researchers regarding what is already

known and what remains to be tested regarding the topic of research. It guides the

researcher to avoid duplication and provides useful suggestion for further research of

given topic.

Market Analysis and Consumer Research Organization has presented a report on, “A

study of Mobile Phone Usage among the Teenager and Youth in Mumbai” They have

attempted to study the have attempted to study the attitude of teenager of towards cellular

phones and enumerate the pattern and arrive peculiarities gender wise14. Further they

have examined the way young people relate to the functionality of mobile phones as well

as assess observable phenomena. It was analyzed that majority of respondents perceive

cell phone as the technology that offers convenience and makes their life easier.

10

Srivastava and Bhatnagar in their article “Turnaround @ Motorola India – Mobile

Devices Business through the HR Lever” published in Vikalpa, Volume 33, No., January

– March 2008 the study assessed turnaround: Motorola India – Mobile device business

through the HR lever’15. It is a comprehensive and intensive case study. SWOT analysis

of Motorola India was highlighted. The study shows how company overcomes from

failure to success by using various strategies. The study is on behaviors and preference of

consumer. A through review of literature revealed that most of the studies reported on

service quality focused on the service delivery aspects, ignoring the role of technical

quality. In this context, a study of Seth et.al discussed above is worth noting which

developed a valid and reliable instrument to measure customer perceived service quality

incorporating both service delivery as well as technical quality aspects. On the basis of

225 sample size who are regular users of cellular mobile service the study concludes that

responsiveness is the best predictor, followed by reliability, customer perceived network,

quality, assurance conveniences, empathy and tangibles.

Motorola in China

Motorola opened a representative office in Beijing in 1987, and set up Motorola

(China) Electronics Ltd. in Tianjin in 1992

Currently Motorola's facilities in China include a wholly-owned company, a

holding company, 9 joint ventures and 24 subsidiaries, with more than 12,000

employees

Total investment in China by the end of 2002: US$ 3.4 billion

Sales in China in 2002: US$5.7 billion

Motorola's Performance in China in 2003

Total sales: US$4.67 billion

Total exports: US$4.09 billion (including US$1.29 billion in International

procurement and an export of US$2.8 billion by Motorola China)

Local sourcing: US$2.8 billion

Total employees: 10,000(with 1,400 for R&D)

11

METHODOLOGY

Testing of modern microprocessor designs remains a challenging problem. At Motorola's

Somerset Design Center, we rely heavily on Design-For-Test (DFT) to address these

challenges. To date our efforts have been very successful. This paper reviews our DFT

methodology and how the DFT group is dealing with the new challenges that are facing

PowerPCTM microprocessor designs Design-for-test methodology for Motorola

PowerPCTM microprocessors. Available from:

Motorola SPS's SCORPION project was completed in approximately six months using

Cadence's Alta system-level methodology. The SPW design environment was used to

create and test a virtual prototype of the Motorola Graphics Engine chip before

implementation. The original Graphics Engine design was targeted to a FPGA, placed on

a printed circuit board for rapid prototyping and run in a test facility. Testing involved a

real video source feeding the design while designers verified the image on screen. Once

designers were satisfied with the design, it was retargeted.

Because the SPW design environment supports parameterized libraries, the development

team was able to reuse portions of the previous design of the Graphic Engine. SPW

provided the front-end environment to capture and reuse specific blocks from the

Graphics Engine to simulate the entire SCORPION chip, and then to generate VHDL or

Verilog HDL for synthesis. From synthesis, the design was targeted to a Motorola

submicron technology.

The completion of the SCORPION project underscores Motorola's ongoing commitment

to Cadence's Alta system-level design methodology. The methodology has been used

successfully within Motorola for virtual prototyping before silicon implementation and

design reuse, as well as for intellectual property delivery to customers.

In 1986, Bill Smith, a senior engineer and scientist within Motorola’s Communications

Division, introduced the concept of Six Sigma in response to increasing complaints from

12

the field sales force about warranty claims. It was a new method for standardizing the

way defects are counted, with Six Sigma being near perfection. Smith crafted the original

statistics and formulas that were the beginnings of Motorola’s Six Sigma methodology.

He took his ideas to CEO Bob Galvin, who was struck by Smith’s passion and came to

recognize the approach as key to addressing quality concerns. Six Sigma became central

to Motorola’s strategy of delivering products that were fit for use by customers.

Following a common Six Sigma methodology (measure, analyze, improve and control)

Motorola began its journey of documenting key processes, aligning processes to critical

customer requirements and installing measurement and analysis systems to continuously

improve the process. As a result,

FROM QUALITY TO BUSINESS IMPROVEMENT

While Six Sigma was originally created as a continuous quality improvement technique,

today it is significantly different than the total quality management (TQM) approach of

the 1980s. Table 1 (p. 13) shows the key differences between Six Sigma and TQM. From

our extensive experience, Motorola has learned Six Sigma goes far beyond counting

defects in a process or product. The next generation Six Sigma is an overall high

performance system that executes business strategy. Experience leads us to the insight

that Six Sigma demands the following four steps: 1.Align executives to the right

objectives and targets. 2.Mobilize improvement teams. 3.Accelerate results. 4.Govern

sustained improvement.

The new Six Sigma starts with senior executives creating a balanced scorecard of

strategic goals, metrics and initiatives to identify the improvement points that will have

the most effect on the organization’s bottom line (see Figure 1). Critical scorecard

metrics drive stretch goals for the various business processes owned and supervised by

senior executives. Process owners champion the creation of high impact improvement

projects to realize the strategic goals. In the second generation Six Sigma at Motorola,

processes are not limited to the classic product and service domains. They can involve

market share improvements, better cash flow and improved human resource processes.

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Executives select and supervise a handful of improvement projects by releasing

constraints in business processes that cause critical business gaps.

Six Sigma business improvement teams use an action learning framework to build their

capability and execute the project (see Figure 3). Executives select appropriate BB and

Green Belt (GB) team members based on functional expertise and provide appropriate

resources. Our action learning framework methodology combines structured education

with real-time project work and coaching. This approach quickly bridges candidates from

learning to doing. BB and GB candidates take an assigned business improvement project

to their training. Throughout the training and project work, they are learning problem

solving, project management, process optimization and statistical skills while applying

them to the business problem at hand. Outside the classroom, the candidates and project

teams receive expert support from coaches on a justin-time basis. Ongoing reviews with

the project Champions also ensure the projects are progressing according to their timeline

and milestones. Motorola recognizes change is best accomplished in sprints rather than

marathons, so aggressive clock management is key to driving projects toward the desired

results in time to make a difference. Finally, a campaign management approach helps

integrate the

14

DATA ANALYSIS & INTERPRETATIN

DATA While EDAS can accept any delimited text file for input, the manufacturing data

used by the system usually comes from two main sources: the Synergy database, and the

FTDB database. Physical and electrical data recorded during the wafer manufacturing

process is stored in the Synergy database, which is based upon Oracle. EDAS users can

extract the information via a Pro C and Motif interface, which stores the extracted data in

several SAS datasets required by EDAS. Physical and electrical data recorded during the

final manufacturing process comes from the testers in binary files using the industry

standard Standard Test Data Format (STDF) files. The FTDB system records information

about the contents of these files into an Oracle database. EDAS users can query the

database, then acquire the proper STDF files and have them converted to SAS datasets

using a SAS/AF application that is part of EDAS. Any Motorola Synergy or FTDB

database anywhere in the world can be accessed remotely, allowing engineers to analyze

their products from inception to shipment, as parts move through various factories. EDAS

uses two datasets for its analysis. The first holds the information about the wafers and lots

under test, as well as the test results data. The second contains information describing

each test – the values used, as well as any boundary, spec or control limits associated

with each test that may be in the database.

GURU RATING SCORECARD

P/E Growth Investor Peter Lynch

MSI gets a 0% rating based on Peter Lynch's methodology.0%

Detailed Analysis

Value Investor Benjamin Graham

MSI gets a 43% rating based on Benjamin

Graham'smethodology.

43%

Detailed Analysis

15

Momentum Strategy Investor Validea

MSI gets a 71% rating based on Validea

Momentummethodology.

71%

Detailed Analysis

Growth/Value Investor James O'Shaughnessy

MSI gets a 40% rating based on James

O'Shaughnessy'smethodology.

40%

Detailed Analysis

Small Cap Growth Investor Motley Fool

MSI gets a 41% rating based on Motley

Fool's methodology.

41%

Detailed Analysis

Contrarian Investor David Dreman

MSI gets a 36% rating based on David

Dreman's methodology.

36%

Detailed Analysis

Growth/Value Investor Martin Zweig

MSI gets a 46% rating based on Martin Zweig's methodology.46%

Detailed Analysis

Price/Sales Investor Kenneth Fisher

MSI gets a 28% rating based on Kenneth

Fisher'smethodology.

28%

16

DETAILED ANALYSIS

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SECURITIES PROFESSIONAL IS STRONGLY ADVISED. The information contained

on this website is provided for informational purposes only. 

17

STRATEGIC

Introduction 

I have researched the Motorola Incorporation and with the information have created a

strategic audit for them. Motorola is the leader in global communications. They are

currently revolutionizing broadband. The companies headquarter is in Schaumberg,

Illinois with 320 other facilities in 73 countries. Motorola's CEO and Chairman is

Edward J. Zander and employs more than 9,000 people worldwide and had sales of $42.9

billion in 2006. Motorola today has three business segments: 1) Mobile devices 2) Home

and networks Mobility and 3) Enterprise Mobility solutions. This company has come a

long way since its first product which was the battery eliminator in 1928 and they have

also been recognized for their dedication to ethical business practices. Their products

over the years have grown and changed along with their drive for excellence which has

become stronger than ever. What more can this company do? The strategic audit I have

prepared might shed some light on some ideas for them. 

STRATEGIC AUDIT 

Section V: Analysis of Strategic Factors. 

SWOT- Portfolio (S) - They have a very strong portfolio but need to beef it up. In 2007,

they invested in Vocera Communications. What Vocera Communications does is provide

wireless communications systems which enable instant voice communication among

mobile workers to leading institutions and companies requiring enhanced customer

service, productivity, and teamwork. 

Multiple Business Units (S) - What the Connected Home Solutions segment provides is

wired and wireless broadband networks for homes. This also includes digital set-top

boxes and cable modems. Their Mobil Devices segment designs, manufactures, and

markets mobile phones and accessories. Not only do these devices communicate they

also provide access to data that can be managed. Their Networks and Entertainment

segment provide government, public safety organizations, network service providers, and

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enterprise customers with integrated voice and data communications along with

information solutions. 

Company Structure (W) - Corporate governance is the way they manage their business

responsibly in order to serve the needs and interests of their shareholders. Their board of

directors is elected by shareholders and responsible to them too. The company's business

is run by their employees, managers and officers, under the direction of their chief

executive officer and the oversight of the board. They feel that this way will enhance the

long-term value of the corporation for shareholders. The board monitors the performance

of their CEO and senior management in order to ensure shareholders' long-term interests

are being served. 

Innovation (W) – The Motorola Fellows are a group of people who have a critical role in

technological development of Motorola. They are focusing on technology advancements

and innovation. All members are experts, mentors, and ambassadors of subject matters. 

New Industries (O) – In the automotive-communications industry there is an emerging

market called Telematics. What Telematics does is use wireless voice and data to provide

locations, directions, information, and entertainment services to drivers. Motorola's core

technology components are found in their Telematics Communications Unit and this is

how the car and driver are connected to the response center. This is very helpful in

emergency situation or even if one is lost. 

Multi-Media (O) - Motorola has developed a multi-media mobile device called the

Mobile Extreme Convergence. This new development will remove many flaws and

limitations of design and costs. What this new product has done is simplified the design

of the hardware and software components of the products in order to reduce the cost for

the consumer purchase. 

Global Markets (T) – Even with their forecasted sales for 2008 being over 767 million

phones, the phones have seen a decrease in price. Because of this, it is expected that the

next five years the global market will see weaker growth rates. 

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Advanced Technologies (T + W) – Competitors are basking in the glory that they have

came up with an Iphone or IPOD and the leader in communications hasn't. This is a threat

and weakness for Motorola and they should really think about developing one. One unit

device that serves as a phone and a music player would definitely be marketable to

younger generations. 

Review of Mission and Objectives- Motorola's mission is to seek the benefits the

communities around them at every facility. They achieve this mission through making

strategic grants, strong partnerships with their community, fostering innovation, and

engaging their stakeholders. Their vision is to uniquely contribute in improving the world

they live. 

Section VI: Strategic Alternatives and Recommended Strategy/Strategies. 

Strategic Alternatives- Motorola has a strong portfolio right now and I feel that if they

took on a parenting strategy it would definitely help it grow even more. A successful

parenting company is the Altria Corporation. What the parenting strategy does is focus on

resources and capabilities used to build value across business units. The funds that come

from such a strategy could help Motorola reach above their competitors quite easily.

Another strategy I feel could benefit Motorola is the horizontal growth strategy. Through

this strategy they could acquire market share, production facilities, or even specialized

technology. Expanding into regions that they have not ventured into will definitely help

in positioning them at the top next to the Asian market. Their competitors are a very big

threat right now and to out perform them they would have to look into the competitive

strategy of differentiation. The differentiation strategy will give them the ability to

provide unique and superior value to the buyer in terms of quality, special features, or

after-sale services. With the strategies they have in place already and the multi-business

units they have I feel that the best strategy right now would be the competitive strategy.

They are doing well with most of their strategic factors and this strategy would definitely

help them realize what really is going on around them, especially with the advanced

technologies which are a threat and weakness to Motorola. 

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Section VII: Implementation. 

The program I feel will best help Motorola in any strategy I mentioned above would be

TQM (total quality management). This program stresses commitment and without

commitment nothing will work. It also emphasizes prevention. All employees will focus

on customer satisfaction that means internal as well as external. All employees will be

trained on what and how to measure and interpret data. All operations will be

continuously monitored. Through trust and teamwork employees will be empowered to

make decision independently and together. This implementation program will help all

involved obtain better quality, quicker responses, greater flexibility, and improve or

eliminate non-value-adding work which is what TQM is all about. 

Section VIII: Evaluation and Control. 

Motorola is having a difficult time with some of their strategic factors such as innovation,

new industries, and the global market; they should use the balance scorecard approach.

Here they will be able to focus on four main areas: 1) Financial 2) Customer 3) Internal

business perspectives and 4) Innovation and learning. Each will be assigned a measure,

target, and initiative. The balanced scorecard is a strategic planning and management

system. It transforms an organization's strategic plan and provides a framework that not

only provides performance measurements, but helps planners identify what should be

done and measured. It enables executives to truly execute their strategies. The balanced

scorecard is a management system that enables organizations to clarify their vision,

strategy, and translate them into action. It provides feedback around both the internal

business processes and external outcomes in order to continuously improve strategic

performance and results. When fully deployed, the balanced scorecard transforms

strategic planning from an academic exercise into the nerve center of an enterprise. 

21

Motorola's Strategy for Strategic Investment in China

Motorola's growth in China goes hand in hand with China's economic development and

China's increasing participation in the world economy. Motorola's is increasing its

commitment to supporting local research and development both inside the company and

in partnership with research organizations and universities in China. In addition,

Motorola is devoting essential corporate resources to help develop the capabilities of

local suppliers so that they can take part in the company's uncompromising, world-class

supply chain. As part of Motorola's commitment to China following the country's

ascension to the WTO, the company recently pledged $90 million to set up an R&D

company in Beijing.

Since entering China, Motorola has dedicated itself to the localization of the company's

management ranks. The company's strategies are best summarized as below:

Motorola is steadfastly committed to investing in China and transferring

technology and building local manufacturing and R & D capabilities in order to

provide the country with advanced communications solutions.

The company will continue its long-term plan to localize management in China

and to develop and train excellent local management talents.

The company will continue to work with local companies to create a

comprehensive local supply chain.

Promote joint ventures and cooperative projects with local partners to take

advantage of China's new market opportunities that result from China's increasing

integration into the world market.

China, Motorola is now focusing on

Creating global centers for excellence in China for the company--manufacturing

and R&D centers

Looking for new growth opportunities in the areas aside from our existing main

business --E911, broadband and automotive electronics

Motorola : "A Good Corporate Citizen of China”

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In China, Motorola has been honoring its long-term commitment to China by also being a

good corporate citizen in the country. Such activities rang from philanthropy to

supporting China's accession into the World Trade Organization (WTO). Here are the

highlights:

Anti-SARS: In May 2003, Motorola donated a total of RMB 11.80 million worth

of anti-SARS equipment, cash and goods.

Project Hope: Donating RMB 27 million over 9 years setting up more than 60

Project Hope primary schools and funding 12,000 poverty-stricken children to

return to school.

Higher Education: Providing RMB 11 million to 12 universities including Peking

University and Tsinghua University.

Disaster Relief: Donated flooded areas along the Yangtze River valley and the

Northeast China region; setting up 11 schools for homeless children in flooded

areas.

Sports Sponsorship: The 11th Asian Games, the 21st Universiade, the 7th and 8th

National Games, CNBA, National Football League Matches, Badminton Matches,

and Games for the Handicapped.

Environmental Protection: "green China" Program in 1998.And, in 2003, joined

with other local and foreign handset manufacturers in China to sign a pledge to

take back used phone/battery

Active support for China's bid for the 2008 Beijing Olympic Games: Motorola

actively supported Beijing for its bid t host the 2008 Olympic Games (Motorola's

communication equipment has-been used in seven Olympic Games).

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Recent Awards and Recognitions in China

1. Foreign Investor of the Year, 2003 awarded by CCTV as part of the television

network's Economic Leaders of the Year program. Motorola was the first corporation so

recognized.

2. 2003 Best Service with Innovation in Mobile Telephone Business(CCID)

3. In 2002, Fortune Magazine's Chinese Edition identified Motorola as China's best

global employer.

4. The Magazine's Chinese Edition also cited Motorola as the best among global

companies in China for

Its long-term commitment

Innovation

Adaptation to the local market.

According to company sources, Motorola wanted to become more Chinese than

the local Chinese companies. Explain the strategies adopted by Motorola to gain

popularity with the Chinese consumers. How far do you think those strategies

helped Motorola become a successful company in china.

Part I

The strategies adopted by Motorola to gain popularity with the Chinese consumers:-

Motorola has a principle that is “Understand Chinese culture, pay respect to Chinese

conditions, does not be self- opinionated, do not always blame others”

Initially Motorola adopted a four- point strategy in china that is

Investment/Technology Transfer

Management Localization

Local Sourcing

Joint Ventures/Co-operative Projects

Investment/Technology Transfer

Initially, Motorola set up a plant at a total cost of $120 million in the Tianjin

Economic & Technology Development area for manufacturing pagers, simple

integrated circuits and cellular phones. In the next phase of its investment of

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around $400 million, the company built its second plant for manufacturing

automotive electronic, advanced microprocessors, walkie-talkie systems and

fabricated silicon wafers. In addition to its wholly-owned manufacturing plants

between 1995 and 2002. Motorola entered into nine joint ventures with Chinese

firms to expand its presence in the market and also increase its production

capacity. The joint ventures helped Motorola gain access to the Chinese market

without establishing additional manufacturing plants.

By 2001, the company had invested around $400 million in Joint ventures in

accordance with the Chinese government policy to boost foreign investment in

telecommunication equipment parts, Motorola invested heavily in the production

of semiconductors and mobile handsets. It also brought GSM technology to china

and analysts credited Motorola with introducing and popularizing this technology

in the country.

In the line of four-point strategy, Motorola invested in research and development

centers in China. In 1999, Motorola established the Motorola China Research &

Development Institute in Beijing. The company announced that its research center

would focus on technological development and innovation. Motorola’s R & D

institute conducted research in the area of communication, software and

semiconductors.

Motorola employed around 650 engineers for its research activities in China. The

company also entered into research partnerships with Chinese university and

institutes.

Over the years, Motorola entered into agreement with two Chinese telephone

service providers “China Unicom and China Mobile” for installing telecom

networks across the country. It also provided GSM technology to the mobile

25

service vendors “Hubei Mobile Communications and Eastern Communication Co.

Ltd”

Though Motorola had a significant investment in the semiconductor business, by

the early 2000s, with the worldwide slowdown in the semiconductor business and

the China emerging as the world’s largest mobile market, the company started

focusing more on its mobile handset business.

Management Localization

Motorola not only established manufacturing plants in China, but also localized the

management. The company realized that in order to increase its market share, it had to

hire more Chinese employees. However, Motorola also realized that the Chinese

managers were not familiar with western management concepts and that the country

lacked managerial talent. Though the Chinese were good at basics they lacked practical

application of theories. Thus, Motorola established the Motorola University in 1993 to

train young Chinese people to take up global managerial positions. The mission of the

University was “to train and develop world-class staff for Motorola”. Motorola also

provided in-house training to its employees. The engineering recruits were sent to its

manufacturing plants in other countries like US, Singapore and Hong Kong for on-the-

job training in designing and other high-tech manufacturing procedures. It also initiated a

career management program called Cadres 200. Under this, Motorola selected around 20

top employees for a leadership training program and posted them in Motorola

manufacturing plants across the world.

Sourcing Locally

To the extent possible, Motorola sourced components from the local Chinese players.

This reduced its cost and also complied with government’s requirement that MNCs

working in China had to source a certain percentage of components from the local firms.

Motorola provided training to the local suppliers to improve their standards by extending

technological and managerial support. It also helped them to increase their productivity

and quality levels, and even assisted them to enter global market. Motorola also

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encouraged its foreign supplier to set up plants in China. According to reports by, 2002,

around 45 Motorola suppliers had set up manufacturing in China.

In order to inculcate a competitive sprit among its Chinese suppliers, Motorola conducted

exhibitions. Such as “Teaming for Excellence” which allowed its suppliers to showcase

their talent and components. By 2002, Motorola had 176 direct suppliers and 700 indirect

suppliers and the usage of local components increased from 58.85% in 2000 to 65% in

2001.

Building an Image

Motorola also focused on building its brand among the Chinese. It installed glow signs in

busy market areas and placed advertisements in print and television to increase awareness

among consumers about the company. It was reported that due to its extensive marketing

the Chinese associated Motorola with quality and did not mind paying a premium price

for its products. The company also opened up Motorola exclusive showrooms in the up-

market areas such as Shanghai and Beijing offering latest mobile handset models.

Motorola also introduced a new retailing concept called Motorola Towns. These towns

were based on the Nike Town in the US and aimed at providing a unique retailing

experience to consumers. In Motorola Towns mobile handsets were displayed and

consumers could walk in and use various technological gadgets without spending any

money. According to company sources, the aim of Motorola Towns was to attract the

high end consumers With Chinese players competing on price and gaining a foothold in

the entry level, Motorola decided to concentrate on the high- end market. In order to

obtain visibility for its high-end products, Motorola adopted various marketing

initiatives. The company organized lavish launch parties for its mobile handsets, wherein

models walked down the ramp displaying the new Motorola handsets. Motorola also

sponsored local sports events to enhance brand recall among consumers.

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Along with its marketing activities, Motorola concentrated on building its image as a

good corporate citizen in china. Motorola associated itself with ‘Project Hope’ which was

initiated by the China Youth Development Foundation.

According to Motorola sources, from 1994, it provided financial aid to more than 9,000

children to complete their school education and constructed around 40 Motorola Hope

Schools in about 25 provinces.

To strengthen Project Hope, Motorola undertook a Motorola Hope Tour in which the

company’s top executives visited underdeveloped areas in the country to learn about the

local conditions. Motorola also organized programs like’ Green China’ to protect the

environment in the country.

Motorola started feeling the heat by the early 2000s, when it saw its market share

declining due to fierce competition in the Chinese mobile handset market. In order to

increase its sales and market share, Motorola announced a new strategy in June 2002.

The 2+3+3 strategy

It is an evolution of the previous Four-Point strategy the company has stuck to for the

past 8 years. The new strategy can be explained as follows:

The ‘2’ refers to building China into a world-wide manufacturing and R&D base.

The first '3' refers to three new growth areas including semiconductors, broadband and

digital trunking systems.

The second '3' refers to three $10-billion goals: annual production value to reach $10

billion by 2006, accumulated inputs in China to reach $10 billion by 2006; and local

purchasing to reach $10 billion in China within the next five years".

The core of the new strategy is the same as that of the Four-Point Strategy: Win-Win for

Motorola and China. Based on the new strategy, Motorola will continue to be a good

Corporate Citizen in China, to deeply root itself in China and to be integrated into the

China society.

Measures have been taking by all sectors to implement the 2+3+3 strategy. Motorola has

adjusted its worldwide manufacturing capacity and has shifted some production to China.

The company also decided to hire 4,000 more engineers and researchers and add 1 billion

USD in R&D to the existing 18 R&D centers.

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Part II

Due to its focused strategy in Chinese market, Motorola was the leader in the

mobile handset market with a share of 31% in 2000.

Motorola was successful in China due to its understanding of the market and the

people and because of the strategies it adopted. By 2003 Motorola was regarded

as the most successful as the strategies it adopted helped it to understand Chinese

culture, it paid respect to Chinese conditions.

By adaptation of four point strategy it was able to gain access to Chinese market.

It was able to localized the management. In order to increase its market share, it

hired more Chinese employees. As it established Motorola University in 1993 it

was able to train young Chinese people to take up global managerial positions.

Through this it was able to train and develop world-class staff. Through the

strategies Motorola reduced its cost and also complied with the government’s

requirement that MNCs working in China had to source a certain percentage of

components from local firms.

Because of its strategies Motorola had 176 direct suppliers and 700 indirect

suppliers and the usage of local components increased from 58.8% in 2000 to

65% in 2001.

It was found that due to its extensive marketing the Chinese associated Motorola

with quality and did not mind paying a premium price for its products.

Motorola introduced several new concepts like Motorola Towns. Because of its

strategies Motorola was able to build its image as a good corporate citizen.

However, with increasing competition Motorola started experiencing a decline in its

market share and by 2002 its share was down to 28%. Hence Motorola was bound to

change its Recipe and announced a new five-year ‘2+3+3’ strategy in June 2002.

If we examine closely the Share of Chinese Market in Motorola Global Markets then we

can find that in 1999 China’s share in global Motorola revenues was 10% then in 2000 it

increase to 12% and then in 2002 it grew up to 14%. Hence it shows that the strategies it

adopted helped Motorola became a successful company in China. But it was limited up to

certain period.

29

In early 2003 Motorola experienced a slowdown in sales in China with the outbreak of

Severe Acute Respiratory Syndrome. While Motorola experienced a decline in its market

share, the local players had increased share to 20%. For the same period Motorola’s sales

declined by around 58%.

It was found that the reason for its losing market share was excessive inventory,

desperate competitors and cut throat pricing.

Lastly it was suggested that as it was slow down of demand in urban areas mobile

companies need to focus more on smaller cities and rural areas.

MOTOROLA IN TROUBLE

Motorola was the pioneer of mobile phones, and was the top cellular phone company

in the world until the late 1990s, when it was overtaken by Nokia. This case discusses

some of problems that Motorola faced in 2006-2007, after it failed to follow-up the

success of its iconic phone model, the Razr, and was quickly overtaken by

competitors who launched innovative products to capture market share. Motorola

slashed the prices of most of its phone models in late 2006 to recapture some of the

lost market share, drastically affecting its margins in return. In early 2007, Motorola

announced that it would make an effort to revive its financial performance and not go

behind market share alone.

It also embarked on a business reorganization to better align its operations with its

customers and markets. However, it was widely believed that what the company needed

was a path breaking new product to pull it out of difficulties. But as of mid 2007,

Motorola had no products that looked likely to replicate the Razr's success. In addition to

this, CEO Ed Zander was losing much of the credibility he had earned in 2004-2005,

during his early years at the company, and speculation was rife that Motorola's board

might consider replacing him in the near future.

Issues:

30

The teaching objectives of this case are:

» This case is meant for MBA/PGDBM students, and is designed to be a part of their

Strategy and Business Management curriculum. To appreciate the importance of

innovation in a dynamic environment like the mobile phone industry.

» To examine the reasons for the troubles facing a leading mobile phone company in

the world.

» To understand the risks in depending too much on a single successful product.

31

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