After years of being the world’s leading provider of wireless communications, semiconductors and advanced electronic systems and services, things have begun to slow down for Motorola, Inc. This company was once known for its cutting-edge technology and level of quality. Motorola is now working to revamp its image and catch up with the competition.
Motorola has not yet recovered despite restructuring efforts. The company attributes some of its problems to the weak U.S. economy and a slow down in telecommunications spending. Heavy cost-cutting has been done by the company. Since August 2000, 48,000 jobs-nearly a third of its workforce-have been eliminated. Over the next nine to fifteen months, four more semiconductor plants will be shut down. This will result in the loss of 2,500 jobs.
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Motorola’s five-point strategic plan
In 1998, Motorola decided to reshape the company’s strategy. They decided to go back and seek to change everything at Motorola except their principles, characters, and ethics. This five-point strategic plan is as follows:
- Revitalize the management team
- Stabilize the balance sheet and improve financial flexibility
- Reduce costs and manufacturing capacity
- Produce new, innovative products and growing customer relationships
- Evaluate and re-evaluate business plans in order to remain competitive in the ever-changing business climate
How has Motorola been doing in following its strategic plan? They are making progress in all areas of their strategic plan. The company realizes they still have a lot of work to do.
- They have placed new leaders in 70 of Motorola’s 100 most important assignments within the last 18 months. They also hired a new president and chief operating officer.
- They generated more than $1.9 billion in positive operating cash flow in 2001 and reduced the ratio of net debt to net debt plus equity from 27 percent to 18 percent.
- They reduced their employee population by one-third and closed five manufacturing facilities. In 2001, four additional facilities will be closed.
- They enhanced their position in telematics by design a platform wireless chipset.
- They launched a new China growth strategy.
Although Motorola addressed the need to add new innovative products in their five-point strategic plan, they did not address the fact that they need to be more aggressive to get on the forefront of technology. They have become a follower rather than a leader. A recent example of this with the cellular phone industry. Rather than focusing on providing an easier-to-use handset as Nokia and Samsung did, Motorola decided to produce hip-looking phones in February 2002. They plan on catching up with the industry leader in July 2002, by releasing their easier-to-use handsets.
Motorola’s Code of Business Ethics
Motorola should keep their Code of Business Ethics that currently exists. Motorola’s reputation for ethical business practices has been important to them since the beginning. They were selected as one of the “100 Best Corporate Citizens” for 2001 by Business Ethics magazine because of their corporate social responsibility. The first written Code of Conduct was prepared in the 1970s.
An updated Code of Business Conduct grew out of the Motorola Ethics Renewal Process that was initiated in 1996. Motorola employees from around the world participated in the revision. The Code of Business Conduct highlights Motorola’s important legal obligations, but it also includes their key beliefs-Uncompromising Integrity and Constant Respect for People.
Motorola offers an ongoing ethics program to its employees worldwide to teach them about its core values and to provide them with guidelines as to what is acceptable behavior in ethically sensitive issues. During the sessions, employees identify country-specific issues that may affect the company’s growth or values and discuss how to resolve them. This program relies on a book developed by the company entitled “Uncompromising Integrity.”
It contains a presentation of 24 hypothetical case studies based on ethical issues that it and similar companies have experienced in multicultural situations. The company uses the fictionalized case studies to prompt dialogue about ethical behavior. Each case study is following by several discussion questions and commentaries by experts in the field of ethical analysis concerning the cases.
Motorola should maintain their high ethical standards and pull out of markets that challenge their ethics.
Due to the current economic situation, Motorola should limit market expansion. Their focus should be on getting on the cutting edge of technology. To survive the intense competition, they must anticipate and lead the changes in technology.
To get on the cutting edge of technology, Motorola may need to invest in hiring new, innovative employees. They must invest in resources to explore new technology, also.
SWOT Analysis for Motorola, Inc.
Good business ethics Not on the forefront of new technology
New markets Intense competition
Rapidly changing technology
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