Competitive Analysis of Motorola

Competitive Analysis of Motorola

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Competitive Analysis of Motorola

Company Background

Motorola, Inc. is a Fortune 100 global communications leader that
provides seamless mobility products and solutions across broadband,
embedded systems and wireless networks.

Motorola was founded in 1928 by Paul and Joseph Galvin under the name
Galvin Manufacturing Corporation. The company started out by producing
battery eliminators that allowed battery operated radios to run on
household current. The first Motorola brand car radio was launched in
the 1930aꏡ?s. In 1947 the company changed its name and became Motorola,
Inc. The company expanded in the 1950aꏡ?s and 1960aꏡ?s and became
semiconductor producers for other manufacturers. Motorola also became a
global company in the 1960aꏡ?s. In the 1970aꏡ?s Motorola introduced the
companyaꏡ?s first microprocessor and a prototype for the worldaꏡ?s first
commercial portable phone. In the 1980aꏡ?s and 1990aꏡ?s Motorola
provided the worldaꏡ?s first computerized engine control, invented the
Six Sigma quality improvement process, launched the MicroTac which was
then the smallest and lightest cellular phone on the market. In the 21st
century Motorola has provided the worldaꏡ?s first GPRS cellular system,
the worldaꏡ?s first wireless cables modem gateway, and the MOTORAZR V3
cellular phone. Motorola continues to pursue mergers, acquisitions and
alliances in an effort to grow and continue to be profitable and be a
global leader in the industry.

Some of the major mobile devices products for Motorola are mobile
phones, accessories, Bluetooth devices, IDEN technology, portable energy
systems and two-way radios. Major products for Motorolaaꏡ?s government
and enterprise mobility solutions are biometrics, integrated information
management, computer-aided dispatch systems and records management
systems. Other major products are Motorolaaꏡ?s networks and home
networking solutions.

Motorola has three business units which are mobile devices, network and
enterprise, and connected home solutions. During the fiscal year 2006,
mobile devices generated 66.1% of Motorolaaꏡ?s total revenues, followed
by network and enterprise generating 26.2% of the total revenues, and
connected home solutions generating 7.7% of total revenues. Motorolaaꏡ?s
revenues for the 2006 fiscal year were $42,879 million. The U.S. which
is the companyaꏡ?s largest market accounted fro 43.9% of the total
revenues.

Forces and Trends

Trend: WiMax aꏡá‚" Nellie Stewart

Description of trend:

In the industry environment, Worldwide Interoperability for Microwave
Access (WiMax) is very important to Motorola. WiMax is an Institute of
Electrical and Electronics Engineers (IEEE) standard designated
802.16e-2005 (mobile wire-less). With WiMax cell phones will no longer
be tied to cellular networks.

WiMax has the potential to replace a number of existing
telecommunications infrastructures (WiMax, 2007). WiMax has the
potential of replacing cellular networks, copper wire networks used by
telephone companies, and the coaxial cable infrastructure use by cable
TV while offering Internet Service Provider (ISP) services.

Relevance of trend:

Broadband wireless access (BWA) and in particular WiMax is being

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implemented worldwide. The relevance of WiMax to Motorola is that the
companyaꏡ?s leading competitors, mainly Cisco Systems and Nokia in the
communications equipment business is working to provide WiMax technology
to a mobile society. Mobile phones with WiMax technology is slated to
start showing up for consumers to purchase in 2008. The introduction of
WiMax for cellular phones could also potentially impact Motorolaaꏡ?s
performance in the cell phone business. It is also a sound strategy for
Motorola to be aware of what their competitors are doing. This trend is
also relevant to Motorola because WiMax will reduce the need for
wireline equipment, especially in homes. Wireline equipment is primarily
used for Internet access and e-mail.

Motorolaaꏡ?s strategic adaptability:

Motorola has made some progress with WiMax technology. Motorola has
had many first in the industry and will adapt seamlessly to the trends
seen with WiMax. Motorola is a provider of the WiMax chips and can make
alliances with other providers to integrate WiMax into more cell phones
offered by companies like Sprint/Nextel.

According to the Datamonitor, aꏡosuccessful players will continue to
invest in research, and maintain a diverse technology portfolio, in
order to maintain revenues in the face of changing end-user requirements
(Datamonitor, 2007).

Force: Barriers of entry to new competitors (WiMax) ტႀá‚" Nellie Stewart

Description of force:

In the industry environment, one of the recognized forces is the threat
of new entry. Although there are many rivals in the industry
environment, they are not the only ones that pose a threat to firms in
the industry. The possibility that new firms may enter into the industry
has a huge effect on competition. The entry and exit of new firms are
shaped by characteristics that help define whether or not this threat is
strong. aꏡoIn theory, any firm should be able to enter and exit a
market, and if free entry and exit exists, then profits always should be
nominal. However, industries possess characteristics that protect the
high profit levels of firms in the market and inhibit additional rivals
from entering the marketტႀ? (Porter, 2006).

Relevance of force:

Threat of new entry is a competitive force that poses a challenge to
Motorola. Although the company has a good reputation and good stock
market value; there are other major competitors out there and new
entrants. There is however barriers to entry put in place in this
industry, that prevents new entrants from coming in. The economies of
scale barrier ტႀodeter entry by forcing the aspirant either to come in
on a large scale or to accept a cost disadvantageტႀ? (Pearce & Robinson,
2004). Companies in this industry are expected to come in a large scale
or accept a cost disadvantage.

Costs to entry for WiMax are low relative to cellular technology. The
costs to entry are expected to drop rapidly once there are more
certified equipment manufacturers. If ISPs, communities and
municipalities were to implement networks the costs to entry associated
with infrastructure could be overcome by new entrants. Over time, as the
WiMax technology matures, the barriers posed by operations and support
will be removed due to improvements in network monitoring and customer
service. The real barrier to entry will be caused by large well
capitalized companies form a large presence of form alliances.

Motorolaტႀ႙s strategic adaptability:

Motorola will have continued understanding of the external environment
in an effort to strategically focus the companyტႀ႙s internal processes
to take advantage of the industry structure and to create competitive
advantage. Motorola will continue its use of roadmaps to drive
innovation and growth. ტႀoThe internal view of strategy can be
represented by use of the balanced scorecard strategy map (Norton and
Kaplan, 2000).

Force: Intensity of rivalry ტႀá‚" Nellie Stewart

Description of force:

For most industries, this is the major determinant of the
competitiveness of the industry. Sometimes rivals compete aggressively
and sometimes rivals compete in non-price dimensions such as innovation,
marketing, etc.

number of competitors

rate of industry growth

intermittent industry overcapacity

exit barriers

diversity of competitors

informational complexity and asymmetry

fixed cost allocation per value added

level of advertising expense

Relevance of force:

Communication hardware companies are benefiting from "worldwide
deregulation in telecommunication services and intense competition among
industry players" (www.activemedia-guide.com/telecos_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.

Motorola's main competitors in the wireless infrastructure sector are
Nokia and Cisco Systems. The competitive environment for communications
equipment requires that vendors offer attractive financing terms to
their customers as an important part of their sales packages. Motorola
leads the cable modem market with a 41% share, followed by Toshiba Corp.
at 18%, and Thomson Multimedia at 13%. With intense pricing competition
pricing pressure was as strong as ever in 2002 in such markets as
wireless handsets. New competitors in the field such as Samsung and
Siemens have helped to speed up the pace of innovation by pressuring
established companies to protect their market share.

Motorolaaꏡ?s strategic adaptability:

Motorola will be able to meet or beat the competition with continued
innovation and creativity in creating competitive advantage.

Analysis

It is important for Motorola to be strategically adaptable to the
forces and trends happening in the industry. Motorolaaꏡ?s strategy in
regard to WiMax has been to get in early on the research and development
of communications equipment to facilitate the technology.

Motorola is not only a manufacturer of the WiMax chip the company also
manufacture cell phone and other products that will be used with WiMax.
Motorola will continue to invest in research and development, and retain
a diverse technology portfolio.

Motorola is current not facing any barriers to entry with the current
technological advances. Motorola has a chip that the company
manufacturers and is forming alliances with Sprint/Nextel and other
service providers in an effort to use the WiMax technology and create
competitive advantage.

The intensity of rivalry will not affect Motorola in the industry.
Although the company saw a decline in revenue with the sell of cell
phones, the company can make up for this by re-vamping its product mix
and offerings.

Motorola has historically been a strong competitor with many firsts in
the industry. Motorola will stick with developing strategic plans based
on the remote, industry, and operating environments. Continued
investments in technological advances will keep Motorola a global leader
for providing and innovating communications equipment.

References

Kaplan, R., Norton, D. (2000). Having Trouble with Your Strategy? Then
Map It. Harvard Business Review. Retrieved November 26, 2007 from
ProQuest database.

Pearce, J., Robinson, R. (2005). Strategic Management: Formulation,
Implementation and Control. 9th ed. New York: The McGraw-Hill Companies.

Porter, M. E. (2006). Strategic Management: A model for Industry
Analysis. Retrieved November 26, 2007, from
http://www.quickmba.com/strategy/porter.shtml

Motorola: Forces & Trends PAGE 1
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