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Describe the salient opportunities and threats that exist in Motorola’s external environment.
The company’s venturing into production of digital entertainment devices, voice and data communication systems and enterprise mobility products would be a great way to seize an existing opportunity. The entertainment market is a constant market; the only change that occurs is the quality of the entertainment devices. Another opportunity they can take advantage of is researching in nanotechnology. Thankfully technology and technology information is widely accessible. Technology is obviously a major factor in determining whether or not the company product gets a large market share.
Therefore, research in application of technology especially to their main product cell phones is a good opportunity to grow. New contract wins are also a great profit making opportunity with potential for growth. One large selling point for cell phones is mobile internet devices which Motorola has not really ventured into. These devices allow for internet communication, entertainment and access to information by accessing hot spots in towns and they are a good opportunity for the company to venture into.
The company’s biggest threat is the possibility of being run out of business by intense competition. The company over the years has experienced declining sales and popularity due to the emergence of other companies like Nokia, Samsung and Soni Erickson who have high technology products compared to Motorola. These companies gain dominance wherever they venture encroaching into Motorola’s market share. Emerging technologies adopted by most other companies is always a threat especially the mobile internet devices.
Describe the company’s most prominent strengths and weaknesses.
The company’s most prominent strength is its strong brand. In spite of its decreasing sales it has not really decreased in popularity. A brand that is well known and strong is way easier to renovate. Motorola is a brand that is well recognized in most of the areas it ventures into. The company has robust manufacturing capabilities which eliminated the problems caused by lack of manufacturing equipment and strong manufacturing capacity. Motorola strongly focuses on WiMAX and was one of its earliest advocates. This causes it to actually have a positive effect on its profitability and relevance in the market. This bandwidth is cost effective as it has the potential to deliver multimedia services at a much lower cost than 3g technologies.
The company’s greatest weakness has got to be its declining share in the market for cell phones. Understandably consumers will always opt for better technology especially if it is offered at very affordable prices in various varieties. The company even after improving its cell phone technology has failed to bring these cell phones to its competitor’s standards. As a result they have become less associated with current technology and hence less popular leading to declining market share and less profitability. Their weak profitability is also a weakness that could hinder the company’s growth and prevent them from seizing emerging opportunities due to lack of substantial capital. Their customer concentration weakness has cost them a large portion of their market share. A company needs to pay attention to consumers’ tastes and preferences and they have not been keen to adhere to consumer wants.
Describe the advantages and disadvantages associated with each of Motorola’s strategic options.
One of the company’s strategies is to improve its profitability. The advantage of this strategy will be the availability of extra funds to finance research in technology and consumer tastes (Rosenberg, 1976). The application of the findings from the research also requires financing hence increasing profitability is key to improved product quality. Their effort to better understand their consumers’ demands is the only way they can reclaim their lost market share and expand it hence it is obviously going to be advantageous.
Its heavy investment in the WiMAX is so far one of its best investments. WiMAX is speculated to become the next generation wireless technology due to its support for high speed data transmission. This will raise its ability to compete with other technologies applied in other brand cell phones. Its partnership with google especially since the inception of the android platform alliance is an investment into its future. Social networking appliances are increasingly becoming popular and are expected to gain much more popularity especially among the youth who contribute to almost a quarter of the cell phone market. It could therefore help increase the company’s market share.
The company intends to cut close to three thousand jobs, two thousand of which will be from the handset division in an effort to cut costs. This will obviously adversely affect the victims of the retrenchment process. Less manpower also means less production and even if this may be compensated by quality production it is not a guarantee. Its reduction on the emphasis it places on the European market may rob it of potential consumers in this area who may embrace its improved technology and hence increase its market share and profitability.
Describe how the Corporation’s strategy and organizational structure can be designed to solve the company’s strategic issues.
In order to avoid reducing production levels by laying off employees they could change their payment mode and base it on performance. This in addition to ensuring employees keep their jobs will ensure that they earn what they get paid. It could also work as an incentive to produce more and to offer quality services. Instead of reducing their focus on the European market they could work on maintaining it but diversifying this focus to include other markets. This will ensure they do not lose potential clientele in Europe due to ignorance or lack of seizing an opportunity because they did not try.
Explain how Motorola should proceed.
Motorola has got good strategies especially on the need to improve its profitability. However improving profitability requires a lot of planning, expertise and innovativeness. They need to consider recruiting expert manpower especially in the technology and management department. This will require scouting for qualified and experienced personnel whose performance has been way above average in the past.
Research is an important factor in production. It is the only way a company can stay abreast with current market trends, consumer tastes and preferences and emerging opportunities as well as threats. Research requires that the company invest a large amount of finances to fish for information but this investment will well be worth it. (Mowery, 1999)
Advertisement and product promotion is a good way of claiming market share. It helps that the company has a fairly strong and popular brand name. It will take a lot of advertising to regain the company’s market share not to mention a high level of investment. The company therefore has to ensure that they get it right in the research and production process to ensure they advertise quality products that are in tune with the consumers’ tastes and preferences.
They should also consider spinning off the mobile devices segment as an independent company. This will have the effect of making the company more flexible, enabling a more tailored capital structure and increased management focus all of which are bound to increase the company’s profitability.
Diversification in the long run is strongly recommended however after regaining the company’s market share and improving their profitability. Diversification increases a company’s market share by catering for wider a target market and is always a favorable strategy for improved profitability.
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