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Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden

Motorola Incorporated Marist Consulting Group October 1993. Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden. Overview. Wireless communications and semiconductor powerhouse

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Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden

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  1. Motorola Incorporated Marist Consulting Group October 1993 Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden

  2. Overview • Wireless communications and semiconductor powerhouse • Worldwide provider of cellular telephones and systems, semiconductors, two-way radios, personal communications and information processing equipment • 1992 Revenue of $13.3B • Winner of first Malcolm Baldrige National Quality Award in 1998

  3. Problem Statements • Lack of single unifying corporate strategic vision • Broad diversification in semiconductors prevents adequate investments to maintain strategic market leadership • Ability to dominate next generation of wireless communication standards • Totally engineering driven & inwardly focused

  4. History • 1928 Paul Galvin Established Galvin Manufacturing • 1930 Successfully Commercialized car radios under brand name Motorola • 1947 Changed Name to Motorola Inc. • 1955 Introduces its first pager • 1960 Under Robert Galvin, Expand Int’l • 1979 Management began journey towards total quality in all operations and products. • 1988 Appointed George Fisher CEO. • Malcolm Baldrige Award • 1993 G. Fisher left Motorola

  5. Mission Statement • In each of our chosen areas of the electronics industry, we will grow rapidly by providing our world-wide customers what they want, when they want it, with Six-Sigma quality and best-in-class cycle time, as we strive to achieve our fundamental corporate objective of Total Customer Satisfaction, and to achieve our stated goals of increased global market share, best-in-class people, products, marketing, manufacturing, technology and services; and superior financial results.

  6. External Analysis

  7. General Environment Demographics Opportunities • US is a highly mobile society • Developing world has high population growth • Asia contains 59% of world population • China 20% of world population

  8. Demographics Threats • Growth in population is in regions (LDC) that have little money • Developed nations (MDC) have low population growth

  9. Economic FY93 - United States Opportunities • Recession ended 1Q93 • Deficit down to $92B • Consumer spending up 4.2% • GDP up 3% • Interest rates and inflation are declining • Business capital investment leads recovery

  10. Economic - United States Threats • Trade deficit remains high • Decreased government spending in military sector

  11. Economic - Europe (EC) Opportunities • Maastricht Treaty restrictions, requirement for common infrastructure • Low inflation 3.75% and low interest rates • European economic recovery in progress Threats • Stronger European competition • Slow GDP growth, 2% • High unemployment

  12. Economic - Japan Opportunities • Japan focused on high technology • Committed to capitalism/free markets • High savings rate • Economic recovery forecast

  13. Economic - Japan Threats • One of the sharpest downturns since WWII • GDP only at 1.4% • First time unemployment experience • Trade negotiations slowly continue • Much resistance regarding imports

  14. Economic - China Opportunities • President Clinton approves MFN status • Strong economic growth of 14% forecast Threats • Hong Kong return to communist China • High inflation on mainland • Government nationalized industry

  15. Political/Legal Opportunities • Deregulation of Japanese cellular market to occur in spring ‘94 • Radio spectrum auction by US Government • NAFTA/GATT pending • PCS regulation from FCC pending • Deregulation of European telephone companies

  16. Political/Legal Threats • Cellular phone health risks • Intellectual property rights not protected globally • EPA regulations • FCC regulations • Digital encryption regulations by government (Clipper chip)

  17. Sociocultural/Environment Opportunities • Globalization of markets • More two income families, more disposable income in MDC’s • Rise of mobile workers • “Latch key” kids • Limited phone infrastructure in LDCs

  18. Sociocultural/Environment Threats • Price sensitive consumers

  19. Technology - Opportunities • Rapidly developing technologies • Longer life batteries • Distributive processing • Convergence of computers and communications • New digital standards for cellular GSM, TDMA, CDMA • Miniaturization of components

  20. Technology - Threats • Conflicting standards • Rapid technology change leads to very short product life cycles • Rapid decline experienced after new technology offerings These are key

  21. Industry analysis

  22. Industry analysis Focus on Two primary Industry • Semiconductor • Wireless • Cellular • Paging 85% total business Other 15% Semiconductor 31% Wireless 54%

  23. Industry analysis - Life Cycle Semiconductor • Late Growth Intro Growth Shake Out Maturity Decline

  24. Industry Structure - Semiconductor • Loose Oligopoly • Top 10 suppliers capture 54% of market • Motorola is #3 in 1993

  25. WW Semiconductor Market Top Eight Semiconductors Supplier Market shares Intel 9% NEC 7% Motorola 7% Others Toshiba 52% 7% Hitachi 6% TI 5% Samsung Fujitsu 4% 3%

  26. WW Semiconductor RevenueHistory & Forecast Billion of Dollars CAGR 1993-1998 13.8% Source: Dataquest

  27. WW Semiconductor MarketRegional Consumption vs. Production Consumption Production N.America Japan Japan 43% N.America 40% 29% 33% Europe Europe Asia/Pacific 18% Asia/Pacific 9% 7% 20% Source: Dataquest

  28. WW Semiconductor MarketRevenue Forecast by Application $B Source: Dataquest

  29. Industry Analysis - Semiconductor (Porter’s Five Forces) • Threat of Entry • Low • Capital Intensive • Economics • Intellectual Property (IP) • Threat of Substitutes • Low

  30. Industry Analysis - Semiconductor • Power of Suppliers • Low • Plenty of vendors from which to choose • Possibility of backwards integration • Power of Buyers • Mixed • Memory is a commodity (high) • Microprocessors (low) • Logic (Mixed) Who is the buyer?

  31. Industry Analysis - Semiconductor (Porter’s Five Forces) • Rivalry: • High • No one company has a large market share except for Intel (microprocessor) • Intense price competition

  32. Industry analysis - Life Cycle Wireless Communications • Early Growth Stage Stats offered would work well here!! Intro Growth Shake Out Maturity Decline

  33. Industry Structure - Wireless • Cellular • Oligopoly • Paging • Monopoly - Motorola has 74% of WW market

  34. Cellular Handset Sales By Geography Phone Sales in Thousands Source: In-Stat

  35. WW Cellular Handsets Sales Phone Sales in Thousands

  36. WW Paging Subscribers by Region (in Thousands)

  37. Industry Analysis - Wireless Industry (Porter’s Five Forces) • Threat of Entry: • Medium • Technical expertise and ability to market • Some capital required • Field has large established players • Threat of Substitutes: • High • Phone, e-mail, pay phone, PCS Innovation can come from anywhere

  38. Industry Analysis - Wireless (Porter’s Five Forces) • Power of suppliers: • Medium • Few chipset providers (High) • Many vendors for rest of components (Low) • Power of Buyers: • High • Alternatives • Low switching cost Who?

  39. Industry Analysis - Wireless (Porter’s Five Forces) • Rivalry: • High • Price competition • China trying to reduce Motorola’s share (paging)

  40. Competitor Analysis

  41. Competitor Analysis • Motorola, Inc. • Two major Business • Semiconductors • Wireless communications • Ericsson • Major international wireless company • Intel Corp. • World’s leading semiconductor company Why selects these companies?? Need a SGA

  42. Wireless Competitor Analysis

  43. Motorola/Ericsson Market share WW Cellular analog Systems WW Cellular Handsets Ericsson world leader in cellular systems Motorola world leader in handsets Ericsson claims > 60% of digital cellular systems

  44. Motorola/Ericsson Standard Wars Battleground in Cellular • Ericsson’s AXE digital GSM system platform • Installed in 105 countries • Dominate supplier for GSM in Europe & A/P • Ericsson best positioned for future GSM demand • Motorola’s N-AMPS industry standard in analog cellular in US • Focused on US analog systems • US standard confusion delaying US manufactures • Is Motorola behind in the race to digital?

  45. Semiconductor Competitor Analysis

  46. Motorola/Intel 1992 Market Share WW Microprocessor Share WW Microcontroller Share

  47. Motorola / Intel Taking on the 800 lb. gorilla • Motorola’s PowerPC • Technologically superior (NT OS) • Incompatible with current PC/Windows • Shooting for 20% share of PC market 3-5 years • Intel’s 486/Pentium • Industry standard • Huge install base (150 million x86 PCs) Future Motorola Problem ??

  48. Critical Success Factors High: above average, Med: average, Low: below average

  49. Financial Analysis

  50. Competitor Analysis

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