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June 27, 2014

Strategic Management in Mobile Phone Industry



1.      Introduction

The strategic management of organizations is important for the success in this competitive era. The organizations in mobile phone industry are facing many strategic issues in the global market due to which it is important to assess and evaluate the external aspects for the mobile phone industry and the organization operating its functions within this industry (Haberberg & Rieple, 2008). For this purpose, this paper is providing external environmental analysis using models such as SWOT analysis, PESTLE analysis, and Porter's Five Forces model for Motorola in mobile phone industry of United States.   

2.      Background of Company

Motorola Inc. is one of the most renowned organizations operating in the mobile phones industry. Motorola Inc. is an American based organization with headquarter in Schaumburg, Illinois. The organization is basically a manufacturer of wireless telephone handsets and apart from these products, Motorola is also having a product line of wireless network infrastructure including signal amplifiers, and digital video recorders (Fling, 2009). The organization is widely known for its mobile phones product line that is used to build communication channel. Motorola has a strong presence all across the globe in more than seventy countries due to which fortune magazine gave it the title as one of the America's most admired companies. The largest market of Motorola is in United States and approximately sixty five percent of its target market is outside United States (Fling, 2009).  

3.      Environmental Analysis of Motorola

a.      PESTLE Analysis

The PESTLE analysis is an effective tool to analyze the external environment for the mobile phone industry of US. It involves six essential factors namely political factors, economic factors, social factors, technological factors, legal factors, and environmental factors (Haberberg & Rieple, 2008). This section of the paper is providing the comprehensive analysis of external environment using PESTLE as a tool.

-       Political Factors

The political factor in mobile phone industry of US relates to the factors to which the government is influenced such as government rules and regulations which organizations within the industry are required to follow. In other words, organizations within the industry are required to follow the rules and regulations of the country in which they are operating their functions (Henry, 2008; Analoui & Karami, 2003). Organizations in mobile phone industry should know about the minimum wage, maximum hours a week employees can work and the Health and Safety regulations. These things allow organizations in mobile phone industry of US to avoid bad press from employees damaging the image of organizations for short term and long term (Foss et al., 2005; Cheverton, 2005).

-       Economic Factors

Mobile phone industry in US has become important because it occupies more than one-third of the market on the stock markets such as Dow Jones. The mobile phone organizations are important for the US economy for which the government has to interfere when organizations plan anything such as reducing jobs in US (Haberberg & Rieple, 2008). Consequently, government of US has to plan for helping people in finding jobs, who lost their jobs working in mobile phone organizations. It is important for mobile phone organizations to aware of changes in exchange rates while operating on global scale because changes in rates can impose devastating effect on financial operations of organizations (Analoui & Karami, 2003).

-       Social Factors

Mobile phone organizations operating in Western market understand the social factors of these markets and the main factor they are required to understand is the culture. The reason behind this element is to provide products that are up to date as the mobile phone is considerably a fashion icon (Analoui & Karami, 2003). Consumers consider innovative mobile phones in recent culture because people judge the fashion taste of others based on the selection of mobile phones. The increasing trend in mobile phones use means consumers purchase more mobile phones while selecting the standard mobile phones due to social trend in recent era (Foss et al., 2005).

-       Technological Factors

The technological advances in mobile phone industry are important for the success of organizations operating within the market of US due to its consistent growth and increasing competition.  With the functions such as camera, internet, social networking, and email necessities in mobile phones, organizations in US mobile phone industry are required to consider other innovative functions that can help them in differentiating strategies (Mellahi & Sminia, 2009). Apart from functions, consumers are also considering software as a key indicator of the quality of mobile phones due to which it is important for mobile phone organizations in US to form an alliance with Microsoft or other organizations for latest models. This can be a good move for organizations to be successful as consumers are well aware of technological advancements and it can add value to the products (Soetanto & Dainty, 2009; Figueiredo & Williams, 2011).   

-       Legal Factors

Intellectual property is considerably a key factor for technological business like mobile phone organizations due to which they are required to be protected to ensure the business not losing to rivals. The mobile phone industry in US is not easy for organizations to have a product different from competitors when they release product with innovative capability (Figueiredo & Williams, 2011). Therefore, it is important for mobile phone organizations to protect the rights through patents, copyrights, and trademarks so as to prevent the stealing of products. Apart from the threat of intellectuals from competitors, organizations within US mobile phone industry are required to ensure the avoidance of falling for counterfeiters, who claim to be the original products providers at lower costs (Foss et al., 2005; Cheverton, 2005).

-       Environmental Factors    

It is important for organizations to be considered as environmentally friendly and ethical with manufacturing procedures. The reason behind the element of eco friendly for mobile phone organizations in US is the global effect of global warming so that mobile phones can be operated in appropriate manner. The recycling of mobile phones in US is becoming popular and important for people but the main issue related to recycling is the disposal of batteries in phones because they can be dangerous if not disposed in an appropriate manner (Analoui & Karami, 2003; Haberberg & Rieple, 2008).

b.      SWOT Analysis

SWOT analysis is another effective tool to analyze the external environment for the mobile phone industry of US. It provides both internal analysis and external analysis for the mobile phone industry of US in which strength and weaknesses reflect internal analysis, whereas, opportunities and threats reflect external analysis (Figueiredo & Williams, 2011). This section of the paper is providing the SWOT analysis for the respective industry as follows.   

-       Strengths

o   There is a potential of huge wireless subscribers in US
o   US is the fastest growing mobile market in the whole world
o   In US, consumers are ready to pay for cutting edge services
o   Telecom software, telecom professionals, telecom infrastructure and telecom services are most important elements in giving the shape to economy
o   The economy of the country can get boost due to the strategies of revenue sharing, which leads to mergers and acquisitions, to help organizations in entering new opportunities, and to generate employment
(Hill & Jones, 2009; Kreitner & Cassidy, 2012)

-        Weaknesses

o   Market of US is strongly regulated by government body with the help of appropriate regulated authorities.
o   There are barriers for new organizations to enter the market
o   High cost of service provision is to be faced by organizations within the mobile phone industry
(Hill & Jones, 2009; Kreitner & Cassidy, 2012; Mellahi & Sminia, 2009)

-       Opportunities

o   The US market for mobile phone industry is playing its key role in adding more than million users of mobile phone every year
o   User's base of mobile phone is hitting a saturation point in big cities or states of US.
o   The cellular phones are considered as the common use for every person
o   Rapid growth is expected in the telecom services within US
(Hill & Jones, 2009; Kreitner & Cassidy, 2012)

-       Threats

o   Higher level of risk due to uncertainties along with the cost associated to the mobile phone industry
o   The intellectual property protection in US market is weak
o   Piracy of software and digital content is higher in the US market
o   The political instability can be a threat for the industry
o   Cost of mobile phone deters sufficient buyers from selecting the service
(Hill & Jones, 2009; Kreitner & Cassidy, 2012; Henry, 2008)

c.       Porter's Five Forces Model

-       Threat of New Entrants

The threat of new entrants in the US mobile phone industry is unlikely because the startup cost of entering in the market at high levels requires sufficient investments and time so as to be considered as a competitor of existing organizations in the market (Figueiredo & Williams, 2011).

-       Power of Suppliers

The organizations working in mobile phone industry relies on its suppliers to supply equipment for their products but there are different manufacturers or suppliers available in the market of US. Considering the software suppliers for the mobile phones with enhance features in the mobile phone industry have high bargaining power (Henry, 2008; Hill & Jones, 2009).

-       Power of Buyers

The power of buyers is increasing due to the increasing number of choices in the mobile phone industry. The mobile phone industry in US is price sensitive due to strong competition in the market among organization to find the best value. It is known that there are consumers in the US market connected to the organizations in mobile phone industry for long term. This can cause highly expensive expenditure for the consumers to switch from one mobile phone to another (Haberberg & Rieple, 2008; Figueiredo & Williams, 2011).

-       Threats of Substitute's Products

It is obvious that mobile phones are daily usage products in people's lives in the recent era and it is not easy for people to find a replacement for it. The reason behind it is the difficulty in finding a means of constant contact while being away from home. It can be said that consumers are able to contact people through other communication channels such as social networking websites, email, and landlines. The threat of substitutes in US mobile phone industry is low because of the fact that mobile phones are not only for making calls but also for other functions (Cheverton, 2005; Kreitner & Cassidy, 2012; Analoui & Karami, 2003).   

4.      Recommendations and Evaluation of Strategic Direction

The external analysis conducted in the previous section of the paper provides the evidence that Motorola have a strong promotional strategy due to which the organization can place its products in the growing market of US mobile phone industry. The organization has expanded its products range into international market to increase its share and take every possible benefit of exploring the market (Fling, 2009; Foss et al., 2005; Kreitner & Cassidy, 2012). When the organization under consideration enters the dynamic market, it faces increase in vulnerable threats. The potential threat that Motorola can face is from Japan because it produces products of high quality and sells them at lower prices to prevent the market from being dominated by foreign markets such as Motorola while allowing its organizations to maintain competitive edge for Motorola. In market of United States, SWOT analysis provides that Motorola can face the biggest threat from its competitors such as Nokia, Samsung, and Sony Ericson (Hill & Jones, 2009; Rue & Byars, 2005). Another threat that Motorola can face in the market of US due to the presence of its competitors as the market is consistently facing emerging technologies such as Mobile Internet Device. Such types of devices are advance in the area of social networking technologies to which Motorola may not have the competitive advantage to enhance this technology (Cheverton, 2005; Analoui & Karami, 2003).   
Undoubtedly, Motorola is one of the leading providers of wireless communications, semiconductors, and enhanced electronic systems and services. It is recommended for Motorola to control the emerging US market for wireless communication devices so as to maintain sales, service, and manufacturing facilities through the US. It is also recommended for the organization to maintain its strategies in conducting business for obtaining the leadership in the entire market along with the competitive advantage (Mellahi & Sminia, 2009; Rue & Byars, 2005; Soetanto & Dainty, 2009). It is known that a strategy is a long term plan for organization like Motorola and it is required to be implemented with complete competencies. For this reason, a diverse working environment can allow the Motorola to operate efficiently as it can enable the workforce to establish the collective ideas. It is, therefore, imperative for the organization to provide training to employees consistently so that they can get awareness and expertise in specific areas. It is also recommended for the Motorola that the organization should adapt democratic style of leadership within organization to establish an innovative environment for encouraging employees to provide necessary feedback (Rue & Byars, 2005; Cheverton, 2005; Henry, 2008).
Another element of consideration is the quality to which Motorola should focus on as it is important to avoid loss of current and potential consumers. It can be said that the Motorola can get success through creativity and persistency while looking for opportunities for supplies to obtain success. The organization is aware of the fact that if supplies are in position to have readily supplies on hand, then the consumers are satisfied giving success to the organization. It is obvious that organization is required to compete fiercely to survive in strong competitive environment (Kreitner & Cassidy, 2012; Mellahi & Sminia, 2009; Soetanto & Dainty, 2009). The organization should obtain differentiation in case of its products while using cost leadership and offer low cost to consumers for competing with the competitors in the marketplace. It can be said that there are new service providers in the market, who provide new creative ideas and different products that can have negative influence on the products of Motorola. These products are required to accomplish similar purpose while fulfilling the similar needs of consumers and for this reason; Motorola is required to identify the potential substitute products for services to help in designing the competitive strategy. The organization is required to know that the consumers exert considerable impact on producers and the volume of consumers is huge for the Motorola in US mobile phone industry as they help the organization to design a competitive strategy with the maximizing of their satisfaction (Hill & Jones, 2009; Cheverton, 2005; Soetanto & Dainty, 2009). It can be said that the costs of digital products in the US and international market can reduce with the increase in consumers demand for Motorola. It is provided that the entire market for consumers electronics is expected to rely on innovations and technology. The reason behind such dependency of US mobile phone industry provides an opportunity for Motorola to reduce the prices of digital products with the increase in demand caused due to the increasing number of consumers in the market (Haberberg & Rieple, 2008; Cheverton, 2005; Analoui & Karami, 2003).      
The external analysis also provides that the Motorola possess the tangible and intangible resources due to which it has paved its way towards success. The intangible resources are employees, who are dedicated and motivated towards achieving goals as they can innovate in technology and knowledge management that is essential for organization to obtain success. On the other hand, tangible resources of Motorola are the products that are delivered all across the globe (Mellahi & Sminia, 2009; Figueiredo & Williams, 2011; Soetanto & Dainty, 2009). It is recommended for the organization to be governed by administrators, who possess abilities that are complied with the future of the organization. The reason behind this recommendation is that these administrators are highly talented and acquire required skills in technology. It has been found that the capabilities of Motorola include the experienced employees, who are expertise in the area of technology and they have drafted a marketing plan for the organization along with the strategies to make the organization to become stable in financial aspects. This is important for the Motorola to maintain its position and strategies in the marketplace due to which the organization should have a leader to lead the entire organization in effective and efficient manner towards success (Henry, 2008; Analoui & Karami, 2003; Rue & Byars, 2005).
It is known that the innovation is the core competence of Motorola because it brings the competitive advantage for the organization. The organization should produce new products while enhancing them to bring differentiation in the market for consumers. It can be said that the process innovation can lead the organization under consideration towards the lower costs and improved consumer satisfaction (Foss et al., 2005; Analoui & Karami, 2003; Hill & Jones, 2009). It has been observed in the external analysis of US mobile phone industry that the Motorola can achieve a larger share in the market all across the globe. For this purpose, it is recommended to the organization that it should establish more effective core competence on providing strong brands that are established in the consumers' perspectives while being attracted towards them (Henry, 2008; Figueiredo & Williams, 2011; Mellahi & Sminia, 2009).        

5.      Conclusion


It can be concluded from the entire discussion in the paper that mobile phone industry has been going through the evolution due to the advent and enhancement in technologies. The paper has provided that Motorola has faced many issues like other mobile phone companies in the US marketplace. The effective strategies of the organization implemented by the efficient creative and innovative employees can enable the Motorola to make the competitive level at higher levels in the market of US. It is concluded from the external analysis that the organization has been looking for every possible way to make the sustainable position in the market. The element of globalization is also providing probable opportunities for the Motorola to expand and increase its sales and revenue all across the globe.   

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