Motorola in Trouble

Abstract:

Motorola was the pioneer of mobile phones, and was the top cellular phone company in the world until the late 1990s, when it was overtaken by Nokia. This case discusses some of problems that Motorola faced in 2006-2007, after it failed to follow-up the success of its iconic phone model, the Razr, and was quickly overtaken by competitors who launched innovative products to capture market share. Motorola slashed the prices of most of its phone models in late 2006 to recapture some of the lost market share, drastically affecting its margins in return. In early 2007, Motorola announced that it would make an effort to revive its financial performance and not go behind market share alone.

It also embarked on a business reorganization to better align its operations with its customers and markets. However, it was widely believed that what the company needed was a path breaking new product to pull it out of difficulties. But as of mid 2007, Motorola had no products that looked likely to replicate the Razr's success. In addition to this, CEO Ed Zander was losing much of the credibility he had earned in 2004-2005, during his early years at the company, and speculation was rife that Motorola's board might consider replacing him in the near future.

Issues:

The teaching objectives of this case are:

» To appreciate the importance of innovation in a dynamic environment like the mobile phone industry.

» To examine the reasons for the troubles facing a leading mobile phone company in the world.

» To understand the risks in depending too much on a single successful product.

This case is meant for MBA/PGDBM students, and is designed to be a part of their Strategy and Business Management curriculum.

Contents:

Keywords:

Motorola, Ed Zander, Chris Galvin, Mobile phones, Razr, Nokia Corp., Samsung Electronics, LG Electronics, Restructuring, Apple Inc., Cellular phone industry

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