Motorola’s Global Strategy For years Motorola and other U.S. firms such as RCA,

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Motorola’s Global Strategy

For years Motorola and other U.S. firms such as RCA, Magnavox, Philco, and Zenith were among the world’s most successful consumer electronics firms. In the face of withering competition from the Japanese, however, these firms began to fall by the wayside. Motorola has remained the exception: Today it is one of the world leaders in mobile communication technology, including the manufacture of cellular telephones, paging devices, automotive semiconductors, and microchips used to operate devices other than computers. Motorola has taken on the Japanese head-to-head. Although it may have lost a few battles here and there, the firm has won many more.

Motorola heard the call to battle in the early 1980s. The firm then controlled the emerging U.S. market for cellular telephones and pagers but, like many other firms at the time, was a bit complacent and not aggressively focused on competing with the Japanese. Meanwhile, Japanese firms began to flood the U.S. market with low-priced, high-quality telephones and pagers. Motorola was shoved into the background.

At first, managers at Motorola were unsure how they should respond. They abandoned some business areas and even considered merging the firm’s semiconductor operations with those of Toshiba. Finally, however, after considerable soul searching, they decided to fight back and regain the firm’s lost market position. This fight involved a two-part strategy: First learn from the Japanese and then compete with them.

To carry out these strategies, executives set a number of broad-based goals that essentially committed the firm to lowering costs, improving quality, and regaining lost market share. Managers were sent on missions worldwide, but especially to Japan, to learn how to compete better. Some managers studied Motorola’s own Japanese operation to learn more fully how it functioned; others focused on learning about other successful Japanese firms. At the same time, the firm dramatically boosted its budgets for R&D and employee training worldwide.

One manager who visited Japan learned an especially important lesson. While touring a Hitachi plant north of Tokyo, he noticed a flag flying in front of the factory emblazoned with the characters P200. When he asked what it meant, he was told by the plant manager that the factory had hoped to increase its productivity by 200% that year. The manager went on to note somewhat dejectedly that it looked as if only a 160% increase would be achieved. Because Motorola had just adopted a goal of increasing its own productivity by 20%, the firm’s managers soberly realized that they had to forget altogether their old ways of doing business and reinvent the firm from top to bottom.

Old plants were shuttered as new ones were built. Workers received new training in a wide range of quality-enhancement techniques. The firm placed its new commitment to quality at the forefront of everything it did. It even went so far as to announce publicly what seemed at the time to be an impossible goal: to achieve Six Sigma quality, a perfection rate of 99.9997%. When Motorola actually achieved this level of quality, it received the prestigious Malcolm Baldrige National Quality Award.

Even more amazing have been Motorola’s successes abroad, especially in Japan. The firm has 20 offices and more than 3,000 employees there. It is currently number three in market share there in both pagers and cellular telephones. Worldwide, Motorola controls much of the total market for these products, has regained its number-two position in semiconductor sales, and is furiously launching so many new products that its rivals seem baffled.

Today, Motorola generates over 56% of its revenues abroad. Major new initiatives are underway in Asia, Latin America, and Eastern Europe. The firm has also made headway in Western Europe against entrenched rivals Philips and Thomson. But not content to rest on its laurels, Motorola has set new–and staggering–goals for itself. It wants to take quality to the point where defects will be counted in relation to billions rather than millions. It wants to cut its cycle times (the time required to produce a new product, the time to fill an order, and/or the time necessary to change a production system from one product to another) tenfold every five years. It also wants over 75% of its revenues to come from foreign markets by 2002.

DISCUSSION QUESTIONS

1.What are the components of Motorola’s international strategy?

2.Describe how Motorola might have arrived at its current strategy as a result of a SWOT analysis.

3.Discuss Motorola’s primary business strategy.

Explanation / Answer

1. Motorola's Global strategy involves two-stage process as depicted in the case. In the first step, Motorola decided to learn the Japanese technology and their way of working and in the second step, Motorola will compete with the Japanese manufacturers in terms of quality and productivity. The company wanted its managers of all level to learn from the international top players in the mobile communication industry and especially form Japanese giants. All of its managers explored Japanese firms and focused on their adopted methodology and quality perspective. Application of quality control techniques like SIx sigma made the Japanese firms to produce low priced and high-quality products which gained popularity in US market. Motorola provided training to all of its employees to know the concept of six sigma, other quality control techniques and how to increase the productivity. Motorola learned from the Japanese to set the goals very high so that it is envisioned and people will work for it. It achieved the unbeatable quality of 99.9997% quality and got the Malcolm Baldrige National Quality Award. The firm now operates worldwide and even in Japan with more than 20 offices. This shows the adoption of a new strategy of production and quality helped Motorola to not only survive in the market but also become a market leader.

b)SWOT Analysis

Strengths:

Motorola is the market leader in the mobile communication device manufacturing business, The line of products it manufactures almost touches every corner of communication devices. It has spread its business all over the world and in the US is one of the most trusted brands in the mobile industry. New innovations and higher quality products are the USP of Motorola.

Weakness:

Motorola was following its traditional methods of manufacturing and never thought of new competition from new entrants in the market. The strategy of Motorola was not enough robust to meet the quality challenge which Japanese products are putting forward before the company. The company is a bit complacent to adopt newer methodology and to compete with Japanese firms.

Opportunity.

Motorola could have thought of competing in the global market and gain popularity worldwide. With new inventions in the communication industry, Motorola can pace up its global presence through the adoption of newer methods to produce high quality and surprising products with all new features. It can explore the Asian and African market with its low priced products to capture the market and set a brand image.

Threat

Japanese firms with their higher quality and low priced products can be a threat to Motorola. Japanese are obsessed with the quality revolution in all sort of products Motorola could have thought in that direction to compete with Japanese firms in global as well as US markets. It could have thought of new entrants which only focuses on a group of products and make a breakthrough. The company should be ready to handle all these situations.

c)Motorola's primary business strategy is to give the customer an ultimate satisfaction through its highest quality product. To achieve the same company adopted newer methodologies of quality perspective. Six Sigma techniques were adopted throughout the organization to decrease the number of defects in production. Motorola achieved 99.9997% perfection and gained the highest quality product award. The company also strategized to reduce its cycle time to increase its productivity. Company set unbeatable goals and tried to achieve them. The company tried learning from the new entrants and compete with them rather following traditional methods. It increased the range of products and tried to make its global presence. Now it became the world leader in manufacturing.

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