Assignment and Case Study for Production Operations Management .

Motorola’s Global Strategy

For years Motorola and other U.S. firms such as RCA, Magnavox, Philco, and Zenith were among
the world’s most successful consumer electronics firms. In the face of withering competition from
the Japanese, however, these firms began to fall by the wayside. Motorola has remained the
exception: Today it is one of the world leaders in mobile communication technology, including
the manufacture of cellular telephones, paging devices, automotive semiconductors, and
microchips used to operate devices other than computers. Motorola has taken on the Japanese
head-to-head. Although it may have lost a few battles here and there, the firm has won many
more.

Motorola heard the call to battle in the early 1980s. The firm then controlled the emerging U.S.
market for cellular telephones and pagers but, like many other firms at the time, was a bit
complacent and not aggressively focused on competing with the Japanese. Meanwhile, Japanese
firms began to flood the U.S. market with low-priced, high-quality telephones and pagers.
Motorola was shoved into the background.

At first, managers at Motorola were unsure how they should respond. They abandoned some
business areas and even considered merging the firm’s semiconductor operations with those of
Toshiba. Finally, however, after considerable soul searching, they decided to fight back and
regain the firm’s lost market position. This fight involved a two-part strategy: First learn from
the Japanese and then compete with them.
To carry out these strategies, executives set a number of broad-based goals that essentially
committed the firm to lowering costs, improving quality, and regaining lost market share.
Managers were sent on missions worldwide, but especially to Japan, to learn how to compete
better. Some managers studied Motorola’s own Japanese operation to learn more fully how it
functioned; others focused on learning about other successful Japanese firms. At the same time,
the firm dramatically boosted its budgets for R&D and employee training worldwide.

One manager who visited Japan learned an especially important lesson. While touring a Hitachi
plant north of Tokyo, he noticed a flag flying in front of the factory emblazoned with the
characters P200. When he asked what it meant, he was told by the plant manager that the
factory had hoped to increase its productivity by 200% that year. The manager went on to note
somewhat dejectedly that it looked as if only a 160% increase would be achieved. Because
Motorola had just adopted a goal of increasing its own productivity by 20%, the firm’s managers
soberly realized that they had to forget altogether their old ways of doing business and reinvent
the firm from top to bottom.

Old plants were shuttered as new ones were built. Workers received new training in a wide range
of quality-enhancement techniques. The firm placed its new commitment to quality at the
forefront of everything it did. It even went so far as to announce publicly what seemed at the
time to be an impossible goal: to achieve Six Sigma quality, a perfection rate of 99.9997%.
When Motorola actually achieved this level of quality, it received the prestigious Malcolm Baldrige
National Quality Award.

Even more amazing have been Motorola’s successes abroad, especially in Japan. The firm has 20
offices and more than 3,000 employees there. It is currently number three in market share there
in both pagers and cellular telephones. Worldwide, Motorola controls much of the total market
for these products, has regained its number-two position in semiconductor sales, and is furiously
launching so many new products that its rivals seem baffled.

Today, Motorola generates over 56% of its revenues abroad. Major new initiatives are underway
in Asia, Latin America, and Eastern Europe. The firm has also made headway in Western Europe
against entrenched rivals Philips and Thomson. But not content to rest on its laurels, Motorola
has set new–and staggering–goals for itself. It wants to take quality to the point where defects
will be counted in relation to billions rather than millions. It wants to cut its cycle times (the time
required to produce a new product, the time to fill an order, and/or the time necessary to change
a production system from one product to another) tenfold every five years. It also wants over
75% of its revenues to come from foreign markets by 2002.

DISCUSSION QUESTIONS

1. What are the components of Motorola’s international strategy?

2. Describe how Motorola might have arrived at its current strategy as a result of a SWOT
analysis.
3. Discuss Motorola’s primary business strategy.

Source: adapted from R. W. Griffin and M. W. Pustay, International Business:

A Managerial Perspective, (pages 373/374) © 1999, 1996 Addison Wesley Longman. Reproduced
by permission of Addison Wesley Longman. All rights reserved.
Format for the case:
I. Company Profile
II. Statement of the Problem
III. Alternative Courses of Action
IV. Analysis of each course of action
V. Recommendation/Conclusion (select the best course of action)
VI. Contingency Plan