Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden - PowerPoint PPT Presentation

motorola incorporated marist consulting group october 1993 n.
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Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden PowerPoint Presentation
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Louis Olivieri Lisa Rosenberger Rusell R. Boedeker Thomas G. Mc Nutty Suzi J. Bryden

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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