Motorola represents a large number of firsts, including the first rectangular television picture tube, first practical car radio, pagers, and more. In 1988, Motorola won the first Malcolm Baldric National Quality Award in recognition of quality in American business. This is the commitment to seeking and developing a broad base of knowledgeable, highly trained employees, evident through their innovative training programs, through he establishment of Motorola University, and through the offering of expansive benefit plans to all associates.
The Importance of Organizational Culture to Motorola In the early 1 sass, Motorola was recognized as a true high performance organization with its innovations and socially responsible corporate attitude. Indeed, its organizational culture is identified as a source of competitive advantage for the firm. Working in quality teams, members strive to provide the highest level of customer satisfaction, measuring defects in incidents per billion.
Motorola earmarks more than $100 million a year for training, with everyone in he organization, however humble, spending at least a week a year back in the classroom at Motorola University, courtesy of the company. 3 Motorola lists its fundamental objective as total customer satisfaction: “To serve every customer better than our competitors do with products and services of excellent value and quality, and thereby earn continued enthusiastic trust and support. ” It wishes to accomplish this objective with respect for the individual, a statement it makes clear in its shared beliefs.
People To treat each employee with dignity, as an individual; to maintain an open atmosphere where direct communication with employees affords the opportunity to contribute to the maximum of their potential and fosters unity of purpose with Motorola; to provide personal opportunities for training and development to ensure the most capable and most effective work force; to respect senior service; same year that George Fisher (now president of Kodak) became president of the firm; he is credited by many with bringing Motorola into the cellular age.
Beginning in 1987, Motorola began the design of IRIDIUM. The system is a satellite-based, wireless communications network. It consists f 66 interconnected, low-orbiting satellites that deliver voice, data, fax and paging through a hand-held phone. The system will simplify communications for business professionals, travelers, residents and other users, permitting them to reach any destination on Earth. Along with Motorola, Sprint and Iridium Canada are contributing to the development of IRIDIUM system to the North American continent.
The development of IRIDIUM will provide customers with hightail service at a reasonable rate. As Motorola continued to expand its worldwide presence in the global marketplace through products and services, the need or talented personnel to uphold these established standards has increased. In recognition of this essentialist, Motorola has demonstrated a high to compensate fairly by salary, benefits and, where possible, incentives; to promote on the basis of capability; and to practice the commonly accepted policies of equal opportunity and affirmative action.
Integrity and Ethics To maintain the highest standards of honesty, integrity and ethics in all aspects of our business?with customers, suppliers, employees, governments and society at large?and to comply with the laws of each country and community in which we operate. From a proponent of leadership training to a leader in quality control processes, Motorola has created an internal climate that fosters high standards and a high performance culture. The firm depends on Total Customer Satisfaction Teams (TTS) to ensure the firm’s commitment to quality.
These teams are now made up of almost 30 percent of Motorola’s 150,000 employees, and a goal of 10 times reduction of defects every two years puts pressure on them to constantly devise new ways to develop and deliver their products and services. Motorola views itself as family and encourages employees to balance their work ND family responsibilities. They support onsite child care centers and fund a wellness program for all employees. Authors John Cotter and James Heist’s study on corporate culture shows that: 1. Corporate culture can have a significant impact on a firm’s longer economic performance. . Corporate culture will probably be an even more important factor in determining the success or failure of firms in the next decade. 3. Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are full of reasonable and intelligent people. 4. Although tough to change, corporate ultras can be made more performance enhancing. Organizational culture can be a two edged sword, however. Strong cultures may contribute to high performance for extended periods of time but may actually result in an inability to adjust when conditions change.
It’s important to foster a balance between stability and flexibility for change, an objective that is difficult to maintain. For many firms, success in the short term causes problems with inflexibility to changing situations in the long term. So What Went Wrong? In early June 1 998, Motorola CEO Chris Galvan announced that the company would take a $1. 5 billion charge and lay off 15,000 employees. Motorola’s semiconductor business, which grew 23 percent in 1995, slowed to a 1 percent growth rate early in 1998. In recent years Motorola’s stock has dropped 40 points, Tao low of $50 in 1998, and its share of the U.
S. Cellular phone market has plummeted to 41 percent from 54 percent. “It’s kind of depressing,” moans one money manager. “It’s not as though people weren’t barking and screaming to management about what was going wrong. ” Maggie Wildcatter, a former top executive with AT Wireless Services and its predecessor, Macaw Cellular, lends insight into Motorola’s troubles. In the early sass, 85 percent of the cell phones Macaw sold to subscribers were made by Motorola, whose flip phones, the most advanced at the time, were in hot demand.
Around that time Macaw decided that the future of cellular was digital, and over the next few years Wildcatter met repeatedly with managers at Motorola’s Schoenberg, Illinois, headquarters and in her Seattle office, urging them to develop a digital phone. Motorola said it would work on it. So in the beginning of 1 996, not long after AT Wireless had rolled out its digital network, Motorola unveiled its Starch hone: light, beautiful?and analog. AT had no choice but to turn to cellular phone manufacturers Monika and Ericson for digital handsets.
By the end of 1997, fewer than 40 percent of AT’ cell phones were Motorola’s. “It was bizarre,” says Wildcatter, now CEO of Wink Communications, an interactive- TV company. “We were very forthright with what we wanted. I don’t know if they didn’t listen or they thought it wasn’t going to happen. It is absolutely amazing to me that they lost their way. “8 In 1998, Monika replaced Motorola as the leading supplier of mobile handsets, a position Motorola had held since the mobile hone industry began. Monika sold 37. 4 million units (an 81. 5 percent increase from the previous year), representing a 22. Percent market share compared to Motorola’s 32. 3 million units (only a 27. 6 percent increase in volume), representing a 19. 8 percent share. Much of Ionians success is based on its digital technology, which accounted for 84. 6 percent of the 1 63 million phones sold worldwide in 1998. Motorola remains the world leader in the declining analog handset sector, perhaps because of its presence in the U. S. Market where digital has been slower to take off. Even with Motorola’s introduction of a digital alternative to its popular Starch model, it retails for $500, compared to Ionians 6100 at $200 and twice the battery life. 0 Inspection of the company’s IRIDIUM satellite system uncovers other weaknesses. The system eliminates “dead cells” by providing complete global coverage for cellular services. However, it comes with a price. The Motorola 9500 phone costs around $3000, and calls are priced anywhere from $1. 75 to $7 a minute. The phone is bulky?about the size and weight of cell phones 10 years ago?with a thick, black antenna. In addition, the system deeds an unobstructed view of the sky, with tall buildings and even dense foliage blocking transmissions. With AT&T and others offering near unlimited long distance cellular service in the U. S. Or under $90 per month, does the Motorola system make sense for anyone but the most remotely located employee? Some of Motorola’s problems are external, including a drop in semiconductor sales due to the Asian economic crisis, increased competition in cellular products, and a decline in pager sales. Motorola is attempting to restructure its operations in combination with cost-cutting measures. However, its situation illuminates the deed for a culture that is both strong and responsive to external factors. In the quickly changing high-technology field, companies are forced to make difficult and costly choices among competing technologies.
Another concern for many is the presence of Chris Galvan, 48, as chief executive since January 1997. Unlike his predecessors, Chris has no engineering background; he studied marketing at Northwestern and rose through the sales side of the business. He intends to break down internal rivalries within the company and to create links between Motorola and other technology companies. 12 The question remains: Can Motorola regain its dominant market position without painful adjustments to its organizational culture? And can Chris Galvan lead them into a new era? Review Questions 1. Discuss the SOOT and PEST analysis of the company.
SOOT ANALYSIS Strength Motorola has a strong brand name and strong alliance, acquisitions and mergers.. It is a well known brand in the industry of telecommunications in different countries around the world. It became well known for being a leader of innovation and also for having superior build quality of their products. Motorola was able to introduce tons of innovative products like the first rectangular elevation picture tube, first practical car radio, pagers, and more which lead them to being able to have a very wide range of products in the market and to have extreme popularity.
Motorola was able to be flexible when it comes to different changes. Motorola’s organizational culture is also one of their strengths. They provide a high level of customer satisfaction (they are customer based) and highly trained, motivated and equipped employees. Their good relationship with their employees gives them an edge. When it comes to pricing, Motorola where able to offer products at an affordable price which in result, will cater a huge argue market. Weakness Motorola has limited promotion and advertising compared with other leading brands which lead to very low brand awareness which also leads to low sales.
They also have an outdated management style which can greatly affect the decisions in their operations. Their supply chain management is not that impressive for they were not able to penetrate thoroughly in the market. They lack operation in some areas where high percentage of target market is located. Also, there came a time wherein some of their products are not user-friendly and like in the case study, some of their products needs a lot of improvements, which exulted to faults and these faults made customers unhappy and unsatisfied so its image was greatly affected.
Another weakness is when there came a time when Motorola failed to react quickly in a technological change. In the case study there was a part where Motorola was delayed in introducing digital phones for it was busy reigning in the declining world of analog and when they where into providing digital phones, their competitor Monika was able to surpass them and provide cheaper but of greater performance than what they offer. Opportunities The introduction of new product entries makes Motorola more competitive. New business partners and ventures increase the dealings of Motorola.
Actually, they have the opportunity to satisfy the market potentially with other products with low cost in the future, this will make them recognizable in the market and would give them an edge over their competitors. Expansion in their target market will increase their profits as they introduce new products with low cost. It can be marketed to higher age groups who wants or needs basic phones just for voice calls. By lowering their phone’s price, many consumers would consider their product affordability and it will increase the percentage of their potential customers.
Threats Motorola’s competitors are now more dominant in the industry. As their competitors see their growth story, many phone makers are seeking for holes just for them to enter and penetrate the market and take a share on Motorola’s market share. There are huge numbers of entries of low price brands and also, other competitors like Monika and Samsung offers high quality products with lower prices. The promotional activities of the competitor is more stronger and also nowadays, network business or semiconductor businesses are gradually decreasing.
Also, the developing distribution cost in some areas might be a wreath for if it increases, the product’s cost would also increase and this would possibly result to decrease in sales. PEST ANALYSIS Political Factors – Motorola always follows the local government policies, tax procedures and employment law in order to prevent and avoid political problems for its organization. Also, Motorola is involved in the political contributions by its political action committee. The company has raised a huge amount of money in order to obtain favorable responses of the legislators.
The company has also hired various lobbying firms who are engaged in lobbying activities on behalf of the company. Economic Factors – This factor has a great impact on Motorola’s sales and business growth for interests and trade rates are included in here. The price of their product will vary on this factor and as we know, the price of the product is one of the primary things a customer considers when it comes to purchasing a product. Motorola takes advantage on local interest rates when promoting products that will accelerate their sales in various countries.
An example of this economic factor is the lessened shipping rate of mobile devices due to changed preferences of the customer towards the mobile technologies like smart phones. This customer shift has impacted the global markets of handsets and the markets Motorola currently caters. Social Factors – Motorola grabbed the market shares by understanding social changes from time to time. As stated earlier, their innovations and affordability leads to increase in target market which will lead to higher sales.
Also, Motorola is effectively engaged in the social and community related activities like investing its time and resources on the wellbeing of the communities by focusing on the educations, public safety, disaster relief and employee programs. The company also initiates its employees o take part in the community improvement programs in order to improve the life of the poor and needy people. Technological Factors – The technological advancement is vital to the success of a company today.
Motorola modified its designs, features and specifications for them to catch up with the standard technologies used today, but during the introduction of digital phones in the market, it looks like Motorola had been left out for a moment for it focused on the reigning analog technology that time and did not easily cope up with the new change in technology. But before that happened, Motorola was a consistent innovator and flexible when it comes to changes and also now, for Motorola is already recovering from their sudden market plummet. . Identify and discuss the marketing mix you will observe in the case study. Product Motorola is a global leader in wireless and broadband communications technologies and related electronic products. At its time, Motorola was the first ones who innovates and introduce products in the market. They consider the market’s needs and demands. Motorola makes SUre that they always include many attractive features and modified designs in their products to draw more customers near them.
As companies become very competitive in competing on which one is giving the best or better mobile phone services, Motorola makes sure that they are in the right track, they have strong alliances and partners which helps them provide a good quality service. In creating their products, they focus more on the product’s attractive design, excellent call quality, ease of use, value-added features, and high quality reliable products. In order for them to be very competitive, they continually innovate their products. Place So this refers to how products reach the customers easily and quickly.
In the ease of Motorola, it distributes its products in several ways. There are numbers of distribution channels where buyers can use to reach Motorola’s products. Through network providers and independent retailers. Price Motorola’s pricing depends on their product’s stage in its Product Life Cycle. Overtime they introduce a new product, it is typically of high price for they have undergone a lot of product and market research so that they will be able to take back its cost but as the product matures and its sales increase, its cost reduces.
Promotion Motorola used both ‘above the line’ and ‘below the line’ promotions to monomaniac with their customers and for them to reach the maximum number of customers. This includes commercials, advertisements, giving of discounts, special offers and the like. Motorola did a wide range promotion but as their Growth stage comes, they seem to decrease it. They depend the type of promotion that they are doing to their Product Life Cycle.
Motorola maintains its close partnership to its retailers and their promotion cost are shared with their retailers so the more products their retailers sell, the more Motorola is able to help them. 3. Provide basis of your recommendations to improve the marketing mix of Motorola. The following are my suggested recommendations to improve Motorola’s marketing mix and their position in the mobile industry. First, Motorola was having a hard time in their market share due to the change in trend and customer preferences.
Motorola’s market share plummeted in a huge percentage and was intensified when the digital phones were introduced. Therefore, suggest that it would be good for them if they will be able to focus and engage themselves conducting continuous research so that they would be able to be informed and updated in the current and future trends which will help them be n the frontline and for them to be able to develop products according to what their customers wants. Second, I recommend that Motorola should improve their promotion, brand loyalty and recognition strategies.
Before, they were always in the peak of leadership in their industry for they were leaders of innovation but now, as many brands entries the market, customers has this multiple brand choices and some other brands had overtaken them. For them to resolve that, I think they need a strong marketing, advertising and promotional communication like making reinforcements to build brand awareness and the like. Third, I think hey need to reorganize their business organization to the most advanced set up that they can do.
Before, Motorola was in a very stable and flexible state, but as different predecessor take their places, there were negative changes in their operations. Motorola should think of a way to bring back and improve their good company culture, integrity and ethics, and performance the way it was before when they were still at the peak of their career. Fourth, they should always innovate and improve their product and its features, as what every company must do. In this way, even if they have tons of competitors, this will give them the nominative advantage which will let them stand out in the market.