Motorola Phone Company is among the best performing companies in the telecommunication industry. This research paper analyses the Motorola by carrying out a PEST analysis and a Porter’s five force industry analysis. The paper aims at looking at the issues affecting Motorola within the context of its operation (political, social, economical and technological) and issues that are related to the telecommunication industry. PEST Analysis Political Factors In its supranational operations, Motorola has to abide by the law in wherever it has based its business.
The company has been done quite well in abiding by the law since; whenever there is a legal question, the organisation has a well established legal department that is charged with the mandate of ensuring that all operations are compliant with the rules and regulations in the context of operation. The company’s policy on political activity states that, no employee, unless approved by the Government Relations Office, is to engage in any political activity or use Motorola’s name, property equipment or even funds in such activities.
The Government Relations Office is responsible for any form of lobbying or government contacting the government on behalf of the company, except on sales activities. In general, the communication sector worldwide is experiencing deregulation, which gives companies more freedom in decision making (Motorola 2010). Economic Factors Motorola has been very successful in emerging markets. The company has sold over 16 million low-cost phones in developing economies. In 2006, analysts predicted that about 1.
6 billion people in developing economies owned mobile phones; this number was predicted to double by 2010. Through such programs, the company has allowed poor people to access technology; this has impacted positively on developing countries use of information technology (WRI 2007, para. 3). Social Factors The company uses wireless broadband technology to connect remote places, and, to develop networks in developing countries. In addition Motorola uses solar cells and wind power to run remotely based stations.
Globally, the company’s technology has been useful in saving lives by ensuring that there is communication among the police, and emergency workers to ensure that get the assistance they need in real time. The company has been active when it comes to corporate social responsibility (CSR), this has been majorly advanced through the Motorola foundation. In 2006, the company joined the ‘RED’ foundation to ensure that women and children in Africa living with AIDS get access to anti-retroviral drugs; about $ 30. 8 million has been donated towards the RED project and other causes.
The company has also taken part initiatives that encourage young cohorts to embrace science and math. In its concerted efforts towards the elimination of social barriers, the company has initiated programs that are geared towards improving environmental and labor conditions with regard to the ICT industry (CSRwire, 2010, para. 6). Technological Factors In collaborating with Voxiva, the GSM Association (GSMA) Development Fund, and the World Health Organization, Motorola has helped in developing a mobile-phone application that assists in disease management in third world countries.
In addition, Motorola’s has enhanced its technology by making products that are eco-friendly. This includes the expansion of the take back programs in more than 80 percent of countries that account for most of its mobile phone sales (Development Fund 2008, p. 1). Porter’s 5 forces analysis Supplier power With regard to the telecommunications sector, Motorola is regarded as a giant; this gives the company an upper hand when it comes to dealing with its suppliers. The company has numerous suppliers since Motorola makes a number of electronic gadgets beside phones.
The supplier chain is simply enormous. The company invests handsomely in research and development, Motorola has over 25,000 engineers and scientists, and more than 21,300 patents. In view of this article’s analysis, supplier power is low (Motorola 2010). Buyer’s power Motorola operates globally hence; the company has a wide global customer base. The company holds a position, making it highly competitive. The strength of Motorola lies in quality, innovativeness and high standards in the telecoms sector. In the light of this argument, buyer power is low thus the company’s products are competitive.
This argument is premised on Motorola’s diversification approach in production, the company does not just concentrate on one product-though there is more emphasis on cell-phone (Motorola 2009, p. 17). The threat of substitution Unequivocally, the telecommunication industry is highly competitive; the threat of substitutes is relatively high. Every cell manufacturer is determined to make a model that is superior and those appeals more to customers than that of its competitors’. Nokia is in fact leading in this industry, while Motorola trails in second place.
Comparatively, Nokia phones are considered cheap and simple to use as compared to those of Motorola. On the other hand, Sony Erricson has the reputation when it comes to manufacture of cell phones with highly powered cameras and walkmans, this is more appealing to the young generation. In analysis, Motorola holds quality and innovativeness, Nokia has affordability and simplicity while Sony Ericson has quality cameras and walkmans. Motorola mainly competes by enhancing its quality and creation of new models, however, this strategy has not been fully successful in eating into Nokia’s market share (Motorola 2009, p.
13). The threat of new entrants Motorola has faced a myriad of challenges in its global operations, particularly in Europe and in emerging markets. In these markets, Nokia has remained dominant. In its strategy, Motorola has in the past few years gotten involved with the GSMA Emerging Market Handset (EMH) Programme; this has helped the company to improve with regard to market share. However, it is quite obvious that such programs continue to put pressure on the company’s profits.
In addition, since competitors are increasingly replicating Motorola’s ultra-slim designs, this makes the threat of entrants imminent-the industry is profitable but dependent on creativity and innovativeness. Motorola has to ensure that it stays ahead, the company must continue to be innovative, and the company should also consider improving its User Interface system. Nevertheless, it can be noted that the company is currently experiencing growth and the telecommunications value chain should be aware of this fact (Development Fund 2008, p.
1). Conclusion This article has presented the PEST analysis (environmental factors) and the Porter’s five force industry analysis of Motorola Phone Company. The paper continues to analyses the current activities of Motorola and goes ahead to give suggestions on how the company should improve its market share in a highly competitive industry. References WRI, 2007, “New Report Shines Light on Electricity Challenges in Asia,” viewed May 28th 2010, from:< http://www. wri. org/stories/2007/05/new-report-shines-light-electricity-challenges-asia>
C SRwire, 2010, Motorola Ranked Fourth Among America’s “100 Best Corporate Citizens,” viewed May 28th 2010, from: http://www. csrwire. com/press/press_release/25038-Motorola-Ranked-Fourth-Among-America-s-100-Best-Corporate-Citizens- Development Fund, 2008, “Phones for health,” viewed May 28th 2010, from: http://gsmworld. com/documents/gsma_case_study_mhealth. pdf? DEVNR=PHONES Motorola, 2008, viewed May 28th 2010, from: www. annualreports. com/partners/Report/19697 Motorola, 2010, viewed May 28th 2010, from: www. motorola. com/Consumers/US-EN/GLP
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