Reviving Motorola - The Zander Way

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Case Details:

Case Code : BSTR197
Case Length : 19 Pages
Pages Period : 1995-2005
Organization : Motorola
Pub Date : 2006
Teaching Note :Not Available
Countries : US
Themes: Corporate Turnaround
Industry : Consumer Electronics

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Focus on Customer Needs

Zander noticed that in Motorola there was a lack of responsiveness to customers. He tried to spruce up the commitment levels. He said, "If the phone rings on this floor, I want it answered in two rings. We have responsiveness problems. I want everybody to start waking up and saying, Who do I serve? I want them to be very externally focused and be able to measure and hold people accountable...

Management Reshuffle

Zander hired new talent in Motorola and also promoted deserving candidates. In April 2005, Zander brought in Stuart Reed from IBM Corporation, where he was Vice President, Worldwide manufacturing for IBM's integrated supply chain. Reed joined Motorola as Vice President, Integrated Supply Chain Organization, to look after Motorola's supply chain management. Reed made Motorola's supply chain more efficient and reduced costs by cutting down the number of suppliers. He also had plans of restructuring IT operations and outsourcing some of them. He planned to reduce the number of suppliers for handsets to three. This included Qualcomm for CDMA, Freescale for GSM, and WCDMA and Texas Instruments for Digital Signal Processors (DSPs)...

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Restructuring Efforts

Zander initiated a restructuring exercise by trying to reestablish Motorola as a unified technology company In July 2004, Zander announced that "Motorola's DNA is too fragmented. A cultural change is needed to increase customer satisfaction, to re-invigorate the brand and to speed up product delivery." He spun-off the 50-year-old semiconductors division in December 2004. After this divestment, Motorola was left with five divisions which included phone handsets, base stations, walkie-talkies, automotive electronics, and broadband...

Unleashing New Products

Zander involved himself in Motorola's day to day activities and constantly encouraged designers and engineers to come up with cutting edge products. He spent a considerable amount of time in the design center. He introduced the idea of referring to phones by names rather than numbers.

Razr

While Razr was being developed, it was not put through the usual development process. The design team was given a free hand to develop a product which they believed would be successful...

The Results

Under Zander, Motorola reported five consecutive quarters (between Q3 2004 and Q3 2005) of increasing profits. However, in the second quarter of 2004, Motorola posted a loss due to the spinning off of the chip unit. 2005 was expected to become one of the most profitable years in Motorola's history...

The Challenges Ahead

According to industry analysts, in order to succeed in the global markets, Motorola needed to catch up with Nokia and keep ahead of its Korean rivals - Samsung and LG. Zander acknowledged that Nokia had entered emerging markets much before Motorola. In his opinion, the developing countries had huge potential...

Exhibits

Exhibit I: Worldwide Mobile Sales Q3 2005 (Unit Sales)
Exhibit II: Motorola Stock Price (2001- 2005)
Exhibit III: Motorola - Five Year Financial Summary
Exhibit IV: Awards Won by Moto Razr V3
Exhibit V: Moto Q
Exhibit VI: Mobile Handsets Unit Sales in the US (Q3 2005)
Exhibit VII: Top Selling Mobile Handsets in the US (Q3 2005)

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