Evaluate the Strategic Decisions Made by Motorola in Response to the Opportunities and Threats in the Global Telecommunication Environment Between 2004 and 2007

1.Introduction

Motorola was founded in 1928, as one of the most famous multinational telecommunication corporations in the world, its inventions in its industry and built quality were widely recognised at the time. The very first mankind landed on the moon transmitted the historical record "one small step for a man, one giant leap for mankind" by using the Motorola device in July 1969. By the end of the 1980s, Motorola had become the leading supplier in cellular phones industry. (Motorola, 2015)

This essay is focusing on the opportunities and threats of Motorola associated with its internal and external business strategy during the period 2004-2007; as a result of business failure, it was determined to split the company in 2008. The details of how Motorola strategically responded to the external threats were also addressed.

1. Opportunity and threat in Motorola environment 2004-2007

During 2004 to 2007, the external environment Motorola was facing could be divided into two aspects: sociocultural factors and technological factors of PESTEL Frameworks(Johnson, G. et al, 2014). From the external point of view, the rivalry among the telecommunication industry was relatively high, causing an additional threat which could be analysed by using Poter’s Five Forces Frameworks(Johnson, G. et al, 2014).

2.1.PESTEL framework

PESTEL was introduced to identify the environment in Motorola’s business strategy, the analysis was made based on the Johnson ‘s framework(Johnson, G. et al, 2014).

2.1.1. Social factor(the Macro-environment layer)

In comparison with the conventional landline, there was tendency of people using cellphone for convenience and fashion purpose. The demand of cellphone has overtaken that of land-line in 2001. According a research, by 2007, there were approximately 50 mobile-phone users for every 100 people globally, where the land-line users only has less than 25 users of per 100 instead (Fernholz, 2014). More than eight out of ten people under the age of 25 had preference of using text message instead of phone calls. As BBC (2003) revealed, more than 80% percent of the younger generation under the age of 25 were found using mobile phone to make phone calls. Furthermore, Banks (2014) suggested that 95% households in the UK prefer to use mobile phone rather than land-line due to its convenience as well as the function of internet-surfing comparing with conventional landline. Therefore, as being one of the leading telecommunication companies, Motorola should statistically occupy a large proportion in the cell-phone market during those times.

2.1.2. Technological factor(the Macro-environment layer)

In the year of 2004, 3G services was introduced to the market, as a result, mobile phones with 3G services technology could be recognised by the global telecommunication market(Anon, no date). To seize the opportunity of the global market, Nokia established its first 3G service centre in Taiwan(Nokia, 2005)

2.2. Porter’ Five Forces Framework

“Porter’s five forces will helps us to identify the attractiveness of an industry in terms of five competitive forces.”(Johnson et al,  2014)