Case Study, History, and Strategic Analysis of Motorola, Inc.
1. Describe the salient opportunities and threats that exist in Motorolas external
environment.
2. Describe the companys most prominent strengths and weaknesses.
3. Describe the advantages and disadvantages associated with each of Motorolas strategic
options.
4. Describe how the corporations strategy and organizational structure can be designed to
solve the companys strategic issues.
5. Explain how Motorola should proceed.
Introduction
The company that I chose for my strategic analysis is Motorola, Inc. The popularity of
cellular phones has made many people familiar with Motorola products, as such service
providers as Verizon, AT&T, and Sprint use cellular devices that Motorola creates and
manufactures. The company, however, does more than just produce cell phones, and it is
currently trying to focus its current strategic attention on semiconductors (citation needed).
History and Financial Portfolio
Paul V. Galvin founded Motorola, Inc. in 1928 when he and his brother Joseph E. Galvin
purchased a business from the Stewart Storage Battery Company that made battery
eliminators used in operating radios using household current and created the Galvin
Manufacturing Company. The company started with five employees and grew gradually. It
expanded its business into the automobile industry by introducing car radios that it sold to
independent car distributors and dealers. When Galvin Manufacturing entered the
automobile industry Galvin coined the name Motorola to link the ideas of motion and
radios (citation needed).
Daniel E. Noble joined Galvin Manufacturing in 1940 as its director of research. A pioneer
in FM radio communications and semiconductor technology, he originated the first
hand-held two-way radio for the Connecticut State Police. He brought his designs to
Galvin Manufacturing and developed a two-way radio system for the US Army Signal
Corps and Galvin Manufacturing subsequently played a significant role with such radio
and communications equipment as the walkie-talkie and handie-talkie in World War II
(citation needed).
Motorola made its first public stock offering in 1947, which is when it officially changed
its name to Motorola Inc. In 1948 Motorola entered the television business and sold more
than 100,000 TV sets in one year, making it the fourth largest manufacturer of them.
During the late 1940s it began to supply car radios to Ford and Chrysler plants for
installation in their automobiles (citation needed).
Motorola took advantage of expanded allocations of radio frequencies to introduce
dispatcher radios with aggressive marketing, and its reputation for reliable equipment
earned it a leading role in the industry. Noble then launched a Motorola research and
development facility in Phoenix, Arizona. Anticipating the enormous potential of the
newly invented transistor, he helped Motorola become one of the worlds largest
manufacturers of semiconductors (citation needed).
By 1950 Motorolas net sales were $177,104,669 and it had 9,325 employees. Its first color
television in 1952 was unsuccessful due to technical problems, a high price, and the failure
of broadcasters to offer an adequate amount of color programming. It pulled the product
from the market in 1956 (citation needed).
Some of the innovations for which Motorola is famous are pagers, which delivered radio
messages selectively to particular individuals carrying them, and the Motrac, which
enabled car radios to operate without running the engine. It was also the first company to
use the epitaxial method to mass produce semiconductors and developed the first
rectangular picture tube for color TVs in a joint venture with National Video (citation
needed).
It pioneered in using low-cost techniques for making the silicon rectifiers in automobile
alternators. Its Automotive Products Division began producing alternators in place of car
generators, inaugurating the companys role as a supplier of under-the-hood electronics. It
also designed and made eight-track tape players for the auto industry in collaboration with
Ford and RCA. Domestic and foreign car manufacturers soon became customers for then
and eight-track players became the Automotive Product Divisions second major product
line (citation needed).
As the cost of semiconductors continued to decline their applications in consumer
electronic products increased and created a major new market. Motorola responded with a
full line of low-cost plastic-encapsulated transistors. The entire semiconductor industry
eventually adopted these devices design. In 1967 the company expanded its global
presence by adding six plants internationally (citation needed).
NASAs lunar roving vehicles used Motorolas FM radio receivers 100 times more sensitive
than any car radio to provide a voice link spanning the 240,000 miles between the Earth
and the moon. Motorola also began manufacturing components for battery-powered quartz
and between 1971 and 1979 gained critical experience in producing and supplying
integrated circuits, quartz crystals, and miniature motors to such manufacturers as Timex,
Benrus, and Bulova (citation needed).
The company introduced its first 6800 microprocessor, which used only 5 volts of power
for the communication and business machines sector, in 1975. In 1979 it introduced its
first 16-bit microprocessor, the 68000. Capable of completing two million calculations per
second, it ran and wrote programs for scientific, data processing, and business applications
(citation needed).
In the 1980s Motorola controlled the emerging US market for cellular phones and pagers,
but it was not focused aggressively enough on competing with the Japanese, even after
Japanese firms began to flood the US market with low-priced, high-quality telephones and
pagers. Finding itself pushed into the background, Motorola responded. Its management
was initially unsure how they should respond, so they originally decided to abandon some
business areas and even considered merging their own semiconductor operations with
Toshibas. After much searching they decided to fight back and regain the firms lost market
position. Their strategy involved first learning from the Japanese and then competing with
