External Analysis of Motorola Inc.

Introduction A multinational, Motorola Inc. was an American based company that specializes in the products and services related to the telecom industry. The company after incurring heavy losses around five billion US dollars from the time span of two years, 2007 and 2009, split its business portfolio and services into two independent public companies; Motorola Mobility and Motorola Solutions early this year (Ante, 2011). The sales of these three segments represented around 41%, 42% and 19% for the year 2010 (NYSE:MSI, 2011). The Motorola Solutions is regarded as the only company that will remain operative in the markets as the restructuring and reorganizing of Motorola Mobility being spun off (NYSE:MSI, 2011).

The wireless handset division is said to be the pioneer in the market of cellular phones. The company also was the pioneer in the flip phones with the latest technology until mid-2000s before the launch of android mobile technology system. The company launched its first android phone called Motorola droid by 2009 but the telephone doesnt work in the international markets which lead to the dissolution of the Motorola Mobility (Motorola, 2011, one source, 2011). The Motorola Solutions Inc. offers services related to the wireless handsets, accessories, entertainment services, digital radios, two way radios, and other related services etc.

SWOT Analysis SWOT Matrix Strengths y y Brand name Pioneer in latest technologies y y Weaknesses Declining sales Weak profits

Customer base

Customer concentration

Opportunities y Separate market segments for mobile technology y y Outsourcing in China R&D in latest technology y y y

Threats Competition Environmental regulations Promotional campaigns of competition

Strengths The Motorola Inc. is currently operating in three business segments including the mobile device segments, the network mobility segment and the enterprise wise solutions segment respectively (NYSE:MOT, 2011). The wireless handset division is said to be the pioneer in the market of cellular phones. The company also was the pioneer in the flip phones with the latest technology until mid-2000s before the launch of android mobile technology system. The company launched its first android phone called Motorola droid by 2009 but the telephone doesnt work in the international markets which lead to the dissolution of the Motorola Mobility (Motorola, 2011, one source, 2011). The Motorola Solutions Inc. offers services related to the wireless handsets, accessories, entertainment services, digital radios, two way radios, and other related services etc. The sales of these three segments represented around 41%, 42% and 19% for the year 2010 (NYSE:MSI, 2011).

Weaknesses Motorola Inc. after incurring heavy losses around five billion US dollars from the time span of two years, 2007 and 2009, split its business portfolio and services into two independent public companies; Motorola Mobility and Motorola Solutions early this year (Ante, 2011). In the year 2009, the company was said to have shipped around 14 million handset units which was round 8.5% less than its usual shipping to the international markets (NYSE:MOT Market Share, 2011). This declining market trends shows that the customers have now changed preferences towards the mobile technologies like smart phones. This customer shift has impacted the global markets of handsets and the markets Motorola currently caters. The market share was around 9 per cent in the second quarter of 2009 which dropped to 5 per cent by the end of third quarter of the year 2009 (NYSE:MOT, 2011). Opportunities Motorola can cater the needs of the diverse customer markets by offering entirely individual business segment in the markets. This particular segment will only be dealing in the development of latest technology gadgets and mobile phones by proper research and development. Another level of opportunities lies in the engagement of business outsourcing in China. The Chinese markets represent the great potential of cost effectiveness and manufacturing excellence. Threats Motorola Inc. faces certain level of external threats that can impose serious impact on the business operations of the company. The telecom markets in United States are highly competitive in nature with a large number of market players offering wide range of products. Another level of threat to the company is the economic recession in the United States. The

downfall in the US economy has touched all the levels of business and lives of people. It has severely affected the companies operating in the domestic markets and the demand of the customers. Another possible threat faced by Motorola Inc. is the marketing and promotional activities undertaken by the competitors of the company. Most of these companies are engaged in the aggressive promotional activities that have increased the customer attraction in these market players.

PESTEL Analysis The PESTEL analysis contains the analysis of Political, Economic, Social, Technological, Environmental and Legal environments of a country with reference to a particular object. The PESTEL analysis of Motorola Inc. is as follows: Political The Motorola Inc. or more specifically Motorola Solutions is involved in the political contributions via its political action committee called Motorola PAC. Through its political action committee, and company individuals, the company has spent over five million US dollars to date as political contributions to the wide range of national and state level parties (open secrets org, 2011). Moreover, the company has raised around five million US dollars for the year 2010 in order to obtain favorable responses of the legislators. Most of the contributions were made in the favor of Democratic Party with 53% spending and 60% to the federal level political parties (influence explorer, 2011). The company has also hired various lobbying firms who are engaged in lobbying activities on behalf of the company. Jim English Consulting, Mcallister & Quinn and

Bluewater Strategies are among the lobbyist firms hired by Travelers Cos. (Influence Explorer, 2011). Economic Motorola Solutions is working in three business segments. The mobile devices segment faces intense competition in the worldwide markets. In the year 2009, the company was said to have shipped around 14 million handset units which was round 8.5% less than its usual shipping to the international markets (NYSE:MOT Market Share, 2011). This declining market trends shows that the customers have now changed preferences towards the mobile technologies like smart phones. This customer shift has impacted the global markets of handsets and the markets Motorola currently caters. The market share was around 9 per cent in the second quarter of 2009 which dropped to 5 per cent by the end of third quarter of the year 2009 (NYSE:MOT, 2011). The another segment involves the home and network mobility segment it includes the video game consoles offered by Microsoft and Nintendo as well as Apple TV and Netflix. These companies are offering their specialized services through their internet based service offerings. The third market segment involves enterprise mobility solutions which involve the competitors like Cisco, Kenwood, EF Johnson and EADS telecommunications respectively. These market players along with the competitors of the other markets have given hard time to the company in these economically negative market trends (NYSE: MOT, 2011). Social Motorola Inc. is effectively engaged in the social and community related activities from over a decade in order to raise the living standards of people in the communities it operates in. The company claims to be investing its time and resources on the wellbeing of the communities

by focusing on the educations, public safety, disaster relief and employee programs. For the purpose of its community based initiatives, the company has established its foundation called Motorola Solutions Foundations which has a worldwide presence. This foundation makes grants in the forty four countries around the globe. The education program includes the hosting of various programs like First Robotics Company, innovation grants and various others inside the U.S while in outside the United States of America the company is working in the betterment of wellbeing of Afghanistan and China respectively (Motorola Solutions, 2011). The company also initiates its employees to take part in the community improvement programs in order to excel the living standards of the poor and needy people. Technological The technological advancement is vital to the success of a company in todays competitive environment where large numbers of counterparts are ready to snatch the market share of a company. The business operations and processes are significantly dependent on the latest information technology systems. The Motorola Inc. has implemented the latest information technology systems to facilitate the flow of information within the offices and all the other business divisions (Motorola Solutions, 2011). The company is using the latest technological advancements to for the development of their mobile products. The networks includes the wireless LAN, wireless broadband networks whereas the latest systems offered by the company includes TETRA, ASTRO 25 Network and SCADA Systems etc. along with the wide ranges of other services including accessories, softwares and online services (Motorola Solutions, 2011). Environmental

The Motorola Solutions Inc.s products and services have no direct impact on the environment and the nature but it still tries to maintain environmental stewardship by improving its business operations, recycling activities, less consumption of energy and using the available resources to conduct its business operations. Early in the year 2008, the company as well as the Arizona Water Co. was identified as a source of trichloroethylene TCE contamination that was a result of a malfunction at the business units of the company. This malfunction had severe impact on the environment and the water source in the nearby areas. Motorola was considered as the main Emmitt source of TCE which could cause cancer if reasonable steps are not taken. Both the companies are taking reasonable steps to make sure this event must not happen again and contaminate the water sources (Balazs, 2008).

The company is trying to enhance its business operations to limit its impact on the environment. Among the active initiatives adopted by the company are management of energy resources, waste and water management as well as the proper management and disposal of volatile organic materials used at all the levels of the business production (Motorola Solutions, 2011).

Legal Motorola Inc. is subject to various laws and regulations imposed at state, federal and local level to it. These laws are subject to change over time. The changes can have significant impact on the company and its operations, directly or indirectly. The company has a history of involvement in the few corporate lawsuits that are related to the software, technology, intellectual property respectively (Motorola USSEC, 2009). The most recent law suit against the company was by the Microsoft Company based on the patent infringement action case as a part of its continuous battle against the android operating system (Butcher, 2010).

Porters Five Forces Analysis Porters Five Forces Analysis helps the managers to understand the market position and the effectiveness of business strategies of a firm with reference to five micro and macro level environments (Porter, 2008). These five forces include Competition, New Entrants, and Buyers Power, Suppliers Power and Substitute Products and/or services respectively. The Five Forces Analysis for Motorola Inc. is as follows: Rivalry among established competitions The extent of competition in the existing markets is very stiff in the case of telecom industry. Motorola faces cut throat competition in the business segments it operates in. it is currently operating in the three main segments including Mobile Device Segment, Home and Network Mobility Segment and Enterprise Mobility Solutions Segment respectively (NYSE:MOT, 2011). The mobile segment it operates in faces intense competition with the market players in the worldwide markets. In the year 2009, the company was said to have shipped around 14 million handset units which was round 8.5% less than its usual shipping to the international markets (NYSE:MOT Market Share, 2011). This shrink level of market share is due to the shift in the consumer preferences towards the smart phones like iPhone, android etc. this shift has adversely affected the company market share and declined its profits at large. Bargaining power of suppliers

The bargaining power of suppliers is low in the telecom industry. The Motorola Inc. is currently operating in three basic markets entirely different from one another. The suppliers

available in the market are already in collaboration with the company which makes the supplier power almost minimum against the company.

The bargaining power of buyers The bargaining power of buyers is medium to low in the case of telecommunication industry. The existing companies in this sector are offering competitive prices and product bundle offers like SMS packages, call packages etc. to attract large number of customers in the markets. Due to the stiff competition in the markets, these market players have to make sure that they are delivering high quality services at low prices. The customers have enough power to switch their service to another telecom service provider against low pricing and quality. But the trend in the customer markets is that they usually are reluctant to change their existing mobile numbers and switch the companies easily.

The threat of substitute products or services The industry is very saturated at this moment which means there are large number of market players ready to snatch the shares of a company by providing exceptional services at very low price offerings. This thing attracts the customers a lot and results in the switching of company at large. The threat of substitute products and services in the telecom industry is very high due to the availability of other related services like skype, voipvise, yahoo and gmail calls, internet calls and messages etc. Motorola, as specified earlier, has three main market segments to operate. All the market segments impose great competition and threats of customer switching on the company due to the availability of these substitutes.

The threat of the entry of new competitors

The industry imposes certain barriers to the entry of the new companies in the markets. This means that the level of threat of new entrants is relatively low in the industry. There are varying reasons to the low rate of entry. Among them is the entry barriers imposed by the industry. The new entrants will have to comply with the governmental regulations in order to make their entry in the markets. Then the existing players are protected by the number of barriers which makes it difficult for the new entrants to give hard time to them. Among them are: entry restrictions, tariff rates, high capital requirement, distribution channels etc. These barriers limit them to compete against the existing market players.

Recommendations This study provided brief overview on the external environment analysis of Motorola Inc. The findings of the study suggested that the company should focus on the following factors in order to excel its business and social image in the world:

1. Motorola is been facing hard times in the global markets due to the changed customer preferences. Therefore it is suggested that it should engage in the effective research and development to conduct proper research about the customer preferences in the markets to develop what consumers exactly wants. 2. Reorganize the business organization to the advance set up of the business portfolio in the global markets 3. It can outsource its business units in the Chines manufacturing markets.

References Ante, S. E (2011) Motorola is split in two, retrieved on July 25, 2011 from http://online.wsj.com/article/SB10001424052748704111504576059863418814674.html Balazs, D. (2008) The Arizona Republic Retrieved May 15, 2008, Azcentral.com, retrieved on July 25, 2011 from http://www.azcentral.com/news/articles/2008/05/09/20080509srpvwater0510-ON.html Butcher, D. (2010) Microsofts lawsuit against Motorola unlikely to kill Droid devices: attorney, retrieved on July 25, 2011 from http://www.mobilemarketer.com/cms/news/legalprivacy/7613.html Huff Post (2010) US Supreme Court Ruling, retrieved on July 22, 2011 from http://www.huffingtonpost.com/2010/07/27/disclose-act-faces-gop-fi_n_660461.html

Influence Explorer (2011) Motorola Inc., Lobbying 2009-2010, retrieved on July 25, 2011 from http://influenceexplorer.com/organization/motorolainc/36b42f7641554bd98a7467923d5f77a6?cycle=2010 Motorola Solutions (2011) Community Investment, retrieved on July 25, 2011 from http://responsibility.motorolasolutions.com/index.php/communityinvestment/ (2011) Education, retrieved on July 25, 2011 from http://responsibility.motorolasolutions.com/index.php/communityinvestment/education/ (2011) Environment, retrieved on July 25, 2011 from http://responsibility.motorolasolutions.com/index.php/environment/ (2011) Products and Services, retrieved on July 25, 2011 from http://www.motorola.com/Business/XU-EN/Business+Product+and+Services/ Motorola USSEC (2009) Legal Proceedings, retrieved on July 25, 2011 from http://www.wikinvest.com/stock/Motorola_%28MOT%29/Legal_Proceedings One Source (2011) Fortune 1000 Companies List, retrieved on July 25, 2011 from http://www.onesource.com/free/Company/FortuneList/Fortune/1 (2011) Motorola Inc., Company Profile, retrieved on July 25, 2011 from http://www.onesource.com/free/Motorola-Inc/Company/Profile/19804 Open Secrets Org (2011) Motorola Inc., retrieved on July 25, 2011 from http://www.opensecrets.org/pacs/lookup2.php?strID=C00075341

Porter, M. E., (2008) The Five Competitive Forces that Shape Strategy, Harvard Business Review, p.86-104, retrieved on July 25, 2011 from http://hbr.org/2008/01/the-five-competitiveforces-that-shape-strategy/ar/1 NYSE:MOT (2011) Motorola Competition, retrieved on July 25, 2011 from http://www.wikinvest.com/stock/Motorola_%28MOT%29 (2011) Motorola Market Share, retrieved on July 25, 2011 from http://www.wikinvest.com/stock/Motorola_(MOT)#_ref-MarketShare_0