Sample Essay: Motorola: Present Situation and Future

Introduction

In today’s competitive world many businesses have been struggling to stay afloat let alone compete.  One example of which is Motorola Incorporated.  Galvin Manufacturing Corporation, the maiden name of Motorola, began its operation in the late 1920s as a family owned electronics manufacturing business.  Through the years, as Paul Gavin, the founder and owner, experienced success in his business endeavor, he coined the term “Motorola”; thus, changing his company name from Galvin Manufacturing Corporation to Motorola Incorporated.  From then on, Motorola has been a household name when it comes to radio-related products such as the world’s very first walkie-talkie.

Starting with such products, Motorola went to defense electronics, cellular infrastructure and mobile phone manufacturing.  It created products both for private and government consumers such as mobile phones, laptops, computer processors and radio communication devices.  For several decades now, Motorola has been at the top of its game.  Being the main supplier of microprocessors for Commodore Amiga, Apple Macintosh and Power Macintosh personal computers, plus having a wide array of communication products which includes satellite systems, digital cable boxes and modems, business couldn’t get even better.

It seems that good times indeed, never last long.  This paper aims to analyze and identify the flaws and loopholes of the company by understanding its strength and weaknesses based on a comparative study of the market and its competitors.  The question of whether or not should Motorola Incorporated let go of its mobile phone manufacturing department will hopefully be intelligently answered at the end of this paper.

Body

At the dawn of information technology, Motorola manufactured its Motorola RAZR Line, a thin clam shell mobile phone with camera.  This phone has been regarded as a status symbol, as it was an exclusively fashionable phone only the rich can afford.  Over a hundred and ten million units of it sold, Motorola ranked second, next to Nokia, in the 2005 market study.

In man’s pursuit of science, and the stunning success of the mobile phone retail industry, many entrepreneurs joined in the game.  Nokia, Samsung, LG, Sony Ericson and even the Voda phone from Japan is already out in the market.  China has even manufactured its “own version” of these phones.  Apparently, in the early years, Motorola Incorporated didn’t mind the other players, thinking that 1) the market is too big and 2) Motorola was the first in the industry and its RAZR line was a big hit.

In the Chicago Tribune’s February 1, 2008 issue, Motorola was so overwhelmed with the RAZRs hit image that it has forgotten to move on.  It became stuck to just one idea, one design, one purpose.  Instead of introducing a new product that can be a potential hit, it remained to be the same (Benderoff 2008).

Motorola has a lot of strengths that could have easily combated the present competitive market.  First, they possess a strong engineering know-how.  Second, they were the first one’s who truly made a “wave” with its RAZR line and third, they already captured the market having sold more than 110 million of this RAZRs.  However, nothing exists without an opposite, so, along with its strengths, the company also has its weaknesses, all of which is just because of their attitude. The company was so relaxed that it failed to notice or even anticipate challenges.  Motorola Incorporated had clung to the olden days which made them lose their focus.

In the May 9, 2007 issue of Business Week, Motorola Incorporated was caught up “in the grip of a major earnings stall” as Samsung dominated the global market with its innovative phone features and amazing designs (Ihlwan 2007).  Now this spells trouble for Motorola as all its units are in the market, there is no certainty that its manufacturing costs and other operating expenses will be met.  Not even a break-even figure was foreseen.

It was not only Samsung who took the mobile phone industry by storm, but also Nokia as its sales sky rocketed in the last quarter of 2007 (Ewing 2008).  While Nokia was experiencing an all-time high in revenues, Motorola’s appointed chief executive officer, Dan Brown, was facing the lowest plunge in sales for the fourth quarter, further adding that this will still continue (Crockett 2008).

Motorola Incorporated’s opportunities lies in their technology present technology.  They have been suppliers for many companies in terms of electronic devices which means that they already have a wide channel of markets at their hands.  Apple Macintosh is in itself a very big prospect for Motorola’s mobile phone department.  The company also had the opportunity when the market raved about the RAZR line; but then again, they failed to give importance to what they already have by losing focus.

Motorola Incorporated has indeed been experiencing the most difficult challenge ever as it is bombarded by decrease in revenues, increase in operating costs, plus the fact that a number of competitors have been pulling the company downwards.  Samsung, Nokia, LG, Siemens, Sony Ericson are only a few of the many competitors who are out in the market today.

The market trend of the 21st century is not only focused on people who are earning.  Several studies have shown that consumers can come from different backgrounds having different ages.  This means that consumers’ age range now is wider than before.  The younger, hip crowd are also valuable consumers.  Both Samsung and Nokia appealed to this type of consumer. While Motorola remained to the older age groups, Samsung and Nokia gambled by making something that is new.  Something that is innovative, which means, something unconventional.  Who would have thought to make a pink mobile phone, or an ipod and a phone in one.

Every year, these new players in the market are continually doing market research and studies to always get in tuned with the existing market trend.  They also almost never stop thinking of new designs and features that they could incorporate in the mobile phone as they continually launch new mobile phone models, with a new name, not just sticking to the same “RAZR” for ages.  These companies knew until when they can use a particular phone model name, like the Nokia N70 series for example.

These companies stretched the imagination of the consumers, by introducing new lines of products – models, sizes, features – that are out of the ordinary, they extended the limits of the mobile phone as a mere calling device.  They explored the possibilities with their imagination, which sadly, Motorola Incorporated lacked; or if they didn’t, failed to initialize it at the most crucial time.  Having already lost one hundred and eighty-one million dollars during the first quarter of 2007, Motorola has a long way to go to be able to recover, and this includes selling more of its phones (Ihlwan 2007).  In the last quarter of the same year, Motorola continued to experience problems with its mobile phone division with a downward plunge of 1.2 billion in losses (Bartash 2008).  With such a great figure, it seems that the company has no choice but to close down and let go of its mobile phone manufacturing division.

Although news reports said that there is a long turnaround, what’s important is the chance of getting back.  Another opportunity to engage and win back everything, okay at least half if not everything, of what the company had lost (or will still be losing).  Motorola just needs to understand the value of how customers choose to buy a product.  The reasons can be numerous, from fashion to necessity to status symbol.  Consumers buy these products, like mobile phones not so much of the price but of what they value most.  If they are the type who are always on the go and likes to have access to emails 24 hours, then, the company must also be able to come up with a phone that does such thing.  It is about meeting customers’ needs.  Answering customers demands can mean a fashion trend or statement.  It’s like clothes, after the winter fashion, spring fashion follows. The success and the failure of the company lies on its ability to meet both wants and needs of the customers.  Moreover, it must also be able to provide options, as this is also important.  It gives the messages that you are catering for all, and not only for a few.  Production, manufacturing and shipment costs may also take a toll for every company.  Of course, you will not sacrifice quality for quantity and revenue right?  On this matter, the company may design strategies on how to market a certain model of phone.  For instance, make it a seasonal product launch.  In this way, the company needs not to manufacture a lot.  They can manufacture a limited number and then after it has fully accepted by the market, the company may reintroduce the same model again.  The appeal won’t be lost in this manner, because you create an illusion of “scarcity of the product” which translates to “exclusivity”.

Conclusion

True, their strength lies on the fact that they have already captured the market with the RAZR line of phones, and being the first to have a product with an exclusive fashionable appeal, they could have easily created a “new wave” of phones. Instead of making the mobile phone a necessity, Motorola Incorporated could have easily created a demand on it, making mobile phones a want, rather than a necessity.

It could also seem that with the huge amount of losses the company has incurred over the years, there is no other way to climb back up than to let go of the department.  Although it might be difficult, and it would surely entail more investments, Motorola can still get back on track.  It is not impossible to reclaim the stature one once had.  That is if you just set your mind to it.

My final though on the matter is that, Motorola still has a big fighting chance.  The market already knows the company.  Even if its mobile phones are not the current hit in the market, it has already proven that it can “stir” the market on its direction.  Motorola Incorporated still rings a bell, which means people still knows what it was, is and they are definitely looking forward to what it will become. Motorola Incorporated only needs a little innovation, a trick of their own, which I believe is notdifficulty to create.  Motorola still has a future.

Bibliography

Benderoff E. (2008). “Motorola’s Wayward Path.  Exploiting the RAZRs appeal instead of introducing another breakout hit led to a dead end.  Chicago Tribune online. February 1, 2008. February 12, 2008

<http://www.chicagotribune.com/business/chi-fri_motophonefeb01,0,7375890.story>

Wong W. (2008). “Lack of Style Points Behind Motorola’s Fall from Fashion.” Chicago Tribune online. February 3, 2008. February 12, 2008

<http://www.chicagotribune.com/business/chi-sun_moto_0203feb03,0,3171039.story>

Ihlwan M. (2007). “Samsung Set to Pounce on Stalled Rival.” Business Week Corporate Strategy. May 9, 2007. February 12, 2008

<http://www.businessweek.com/print/globalbiz/content/may2007/gb20070509_368061.htm>

Ewing J. (2008). “Nokia Rockets Past Rivals.” Business Week Europe. January 24, 2008. February 12, 2008.

<http://www.businessweek.com/print/globalbiz/ content/jan2008/gb20080124_974301.htm>

Crockett R.O. (2008)  “What Can Brown Do For Motorola?” Business Week News Analysis. January 24, 2008. February 12, 2008

<http://www.businessweek.com/technology/content/jan2008/tc20080123_229575.htm>

Bartash J. (2008). “Motorola Profit Sinks on Mobile Woes Shares Plunge to Five-year Low;

CEO Sees Long Turnaround.” Market Watch online. January 23, 2008. February 12, 2008. < http://www.marketwatch.com/news/story/motorolas-quarterly-profit-declines-84/story.aspx?guid=%7BCC01CF82%2DC434%2D4C1E%2D97B5%2DFBEF11D78E44%7D&siteid=yhoof>