Market Share and Corporate Strategy in International Industries - Essay Example

?Annotated bibliography Chapter 16 James, Leontiades, 1984. Market Share and Corporate Strategy in International Industries. Journal of Business Strategy, 5(1), pp.30 – 37. James Leontiades conducts a thorough study of three different industries. The author concludes that internationalization of businesses brings about major changes in the market positioning and subsequent strategies. All the companies that were studied emerged to international level after major financial crisis. Theodore, Levitt, 1983. The Globalization of Markets. Harvard Business Review, May/June 1983, p.92-102. This is an empirical study about the globalisation of products. The author argues that global success of various products and brands despite the vast cultural differences among the countries are the proof that the markets are getting more integrated. It mainly speaks about the need of having the products exposed to global markets. Richard E. Caves, 1980. Industrial Organization, Corporate Strategy and Structure. Journal of Economic Literature, 18(1), pp. 64-92. The above resource is a great contributor to the area of strategic management. The study mainly focused on the impact of a strategic choice on company’s behaviour and performance on the markets. Toder, Eric J., Cardell, Nicholas Scott., Burton, Ellen, 1978. Trade Policy and the U.S. Automobile Industry. United States: Praeger. The above book focuses mainly on the importance of scale of operations. It makes a comparison between U.S. and Japanese automobile industry. It clearly describes how in the 1970’s U.S. automobile industry suffered due to low scale of operation. Chapter 17 Brian, Arthur, 1996. Increasing Returns and the New World of Business. Harvard Business Review. July/Aug 1996. p. 2-10. This is an article that examines the theories laid out by Alfred Marshall and other fellow economists. This article makes a contrast between the diminishing returns concept passed on by the economists and increasing returns concept of the present century. The author says that the concept of diminishing returns is valid only in a bulk processing economy of Marshall’s age. He says that in today’s world of technology driven business, the concept that will determines success is ‘increasing returns.’ Chapter 18 Yip, George, 2000. Global Strategy in the Twenty-First Century. United States: Prentice Hall. The author stresses on the importance of companies to go global. The chapter begins by saying that in the 1980’s globalizing the business was a matter of debate and discussion. But when it came to 21st century companies restrain from globalizing only if they have valid reason for doing so. The author says that today’s multinational companies can be classified as internationalist, federalist and global maximizer. The main theme of the article is that companies should become as global as possible and at the same time should localise their products to be successful globally. This article is one of the greatest contributions to the field of globalization. Internal strengths of Motorola Brand Image: The first and foremost strength of Motorola is that it is one of the best brands in the world. Motorola is a brand that is being recognized for reputation, quality and innovation. Motorola is one of the largest used gadgets in most developed countries though it is just an establishing brand in developing countries. Pioneer of Technology: The second major strength of Motorola is that it is the pioneer in various technologies in the telecommunication industry. It was Motorola which introduced the world’s first hand held cellular phone. Motorola was the first company to introduce push-to-talk system in a mobile phone. The company’s latest innovation is the digital high definition television. Product range: The next major strength of Motorola is its wide product range. Apart from wireless handsets, Motorola is also a competing player in wireless accessories, digital entertainment application, voice and data communication systems, wireless access systems and enterprise mobility solutions. Almost all the products of Motorola are very successful in the market. Competitive pricing: A highly competitive pricing is a factor that gives an edge to Motorola. Motorola sells products that cater to the needs of high class as well as the middle class customer segment. This is true especially in the case of mobile handsets. Customer loyalty: Strong customer loyalty is one strong advantage of Motorola. A Motorola customer will hardly shift to any other brand. “Many customers all around the world use Motorola products and are satisfied with it.” (Adam, 2010) Internal Weaknesses of Motorola Non user-friendly products: Most of Motorola’s products especially the cellular phones are not user friendly. This is one reason that many customers who used other products find it difficult to shift to Motorola. Thus the potential customers end up in user-friendly producers like Nokia, Apple and Samsung. Complex Organisational Structure: These days, Motorola’s organisation structure has become more complex. Complex organisation structure makes it difficult for Motorola to manage its international networks and branches. Reducing market share: Motorola is facing huge decline in sales in its mobile handsets market. Such huge decline is happening in the markets of developing countries, which are presently the power house of mobile phone companies’ profits. Less product line innovation: Though Motorola has been pioneers in various technologies, it stands far behind Nokia and Samsung in terms of product line innovation. The smart phones of Motorola are rated very low compared to the competing products. Weak marketing activities: Compared to the rival brands the marketing efforts of Motorola are not very effective. Though the company has adopted strategies like celebrity endorsements, it did not reap the expected benefits for the company’s market share. Poor supply chain system: Motorola has an inefficient supply chain system in practice. The products of Motorola have penetrated very less to various markets compared to their rivals. A Nokia mobile handset is known to any common man living in a rural area of a developing nation. But Motorola has not had a penetration as good as that. Moreover, it doesn’t have a breakthrough product to create an impact in the market. Current strategy of Motorola Motorola has divided their operations into Motorola Mobility and Motorola Solutions the latter one serving the corporate clients and the former one serving the individual consumers. The strategy of Motorola surrounds on the core idea of providing mobility of internet and highest personalized experience on their mobile handsets and gadgets. Some of the core strategies of Motorola are as follows: 1. Capitalise on the technology position 2. Extension of product portfolio 3. Better adoption of customer relationship and global distribution 4. Maximisation of intellectual property 5. Capitalise on the brand name for better marketing 6. Pursue healthy acquisition 7. Expand the home segment globally 8. Capitalise 3D technology (Motorola, 2010) Capitalise on the Technology Position: Motorola uses Android platform on all their Smart Phones. The main reason for this is that Android is open source and various applications can be easily developed on this platform. Also, Motorola is involved in developing the technology that will enable the customers to have a desktop experience on mobile handsets. Extension of product portfolio: Motorola is giving extensive focus on expanding the mobility product portfolios in order to provide ample choice of products to the consumers. Developing Smart Phones and Media Tablets will be the primary focus of portfolio expansion. Motorola will be developing an array of low priced handsets primarily for the emerging markets. Better adoption of customer relationship and global distribution: Motorola is currently well established in North America, China, Latin America, Western Europe and Korea. These are the markets where Motorola has highly satisfied customers. Therefore, every new product offerings will be sold to these markets before others. Maximisation of intellectual property: Motorola currently holds approximately 17000 granted patents. “Areas of strength include wireless technologies, video, security, UI, and design.” (Motorola, 2010) Expanding the intellectual property is one way by which Motorola can strengthen its competitive position. Capitalise on the brand name for better marketing: Motorola has recognized the need of increased marketing efforts. In the coming years Motorola has decided to spend excessively on their advertising and other marketing efforts. Pursue healthy acquisition: Though Motorola has an established R&D capability, the company is looking greatly at strategic technology and business acquisition to support the already existing capability. Evaluation of any such opportunity is a continuous process at Motorola. Expand the home segment globally: As of now the home segment products are focussed only on North American markets. But the company had recognised the increased potential of other markets as well. Motorola is now expanding their home segment portfolio to Latin America, Europe, The Middle East, Africa and other developing Asian countries. Capitalize 3D technology: Motorola is investing more on developing their video infrastructure solutions. This strategy is aimed at enhancing the video content experience of the customers on the PC’s as well as the mobile devices. Motorola is also enhancing the 3d technology for the video interface products. Alternative strategies for Motorola Motorola has been facing serious decline in the market share especially in the handsets segment. This is irrespective of the various strategies that they adopt on the product and marketing front. Therefore, Motorola has to make some alternative choices to regain the market share from the competitors. Some of the strategies that Motorola should adopt are as follows: Multimedia focus: “All of Motorola's business divisions experienced lower sales in the fourth quarter compared with the year-ago period. Sales in the enterprise mobility division dropped 12 percent to $2 billion while the home and networks mobility unit also reported sales of $2 billion, down 24 percent.” (Ojo, 2010) Even with a decline in sales, the company was able to maintain profits through better operating structure. But this is not a sustainable strategy. Increase in the sales is required for maintaining better profits in the long-term. In terms of mobile handsets segment, the products of Motorola are considered to be less competitive that that of many rivals. One of the main reasons for this decline is that the company does not have a competitive multimedia handset in its portfolio. Motorola currently has the model ‘Debut i856’ among its multimedia segment. But rivals like Nokia and Sony Ericsson has various handset models in this range. Even Debut i856 has less specifications and features compared to that of Nokia’s and Sony Ericsson’s handsets. Multimedia segment is one of the most revenue generating segment among the mobile handset market. Therefore, Motorola should research on introducing highly competitive multimedia handsets for competing in the segment. Focus on middle level: Motorola is paying full focus on the upper and lower end of the market. In most developing markets, Motorola has introduced entry level basic handset models which has one of the highest penetration in the market. Similarly, extreme focus is also given on high end mobile phones meant for business customers and handset enthusiasts. But there is very less focus given on the segment in between both. This segment is the one that records highest sales. Nokia has numerous models in this range. Therefore, for increasing the sales, Motorola should introduce more competitive models in this segment. Interface alteration: One of the problems that Motorola is facing is that the number of new customers is low. Most of the old customers stay with the company even when they replace their handsets. Many customers are of the opinion that Motorola handsets are not user friendly. This is one of the reasons for less inflow of new customers. Motorola needs to work more on improving the interface to make it more user-friendly. By doing so, Motorola can regain a considerable market share. Moreover, the quality of colour scheme of the handset is low compared to competitors like Nokia and Apple. Colour scheme is extremely important to increase the usage experience of the customers. Cloud services: Introducing mobile based cloud services is one of the potential areas where Motorola can work on. Mobile based cloud service is just at the infant stage in the market. Significant R&D contribution should be made at the earliest in order to benefit from first mover advantage. The future of mobile handset industry lies in cloud based services. “Instead of purchasing individual applications and downloading them to their phones, users will have the option to access applications via their handset's Web browser, from a cloud-based location, where the data involved is processed and stored on a system hosted by a third-party provider.” (Twentyman, 2011) This system will help in cost reduction for customers as well as handset manufacturers. Increased after sales services: Motorola’s after sale services is rated as poor in many markets, especially the developing markets. Due to the increased consumer complaints regarding the after sale service, many new customers stay away from buying Motorola handsets. The service centre network of Motorola is also less. Therefore, customers face it difficult to find and get the handsets serviced. Introducing a wide network of Motorola branded service centres is essential for maintaining the brand name. Presently Nokia is having own service centres named ‘Nokia Care.’ Having such a branded service centre itself is an assurance of safety for the prospective customers. Therefore, Motorola should introduce a wide network of branded service centres. This decision should be part of the company’s future strategies. Mass penetration of products: Motorola is less penetrated in many markets. The level of supply of products is less compared to that of the rivals. Increased stocking of products is essential for better marketing of the products. There are a large group of customers who buy handsets based on the first glance in the showroom. Such an impact is really powerful and for that better stocking of products is required. This can be done by introducing many offers and incentives for the dealers. A dealer level marketing activity will help to motivate the dealers and drive sales through them. Such an effort will highly payoff in the coming years. Introduction of priority dealers: Introducing priority dealers should be the next best strategic move. A priority dealer means franchised store that will exclusively sell Motorola products. Motorola should first develop a brand name for the priority store. It should then be franchised so that a large market segment can be covered with limited time and effort. This strategy will also help to enhance the brand name of the company. The problem currently is that a multiple mobile handset brand dealers stock every brand and in most cases Motorola gets less visibility among Nokia, Apple and Sony Ericsson. One sole strategy to eliminate this is to introduce exclusive branded store. More focus on developing countries: One final strategy that Motorola should adopt is to expand on the highest growth markets. India, China and Brazil are few of the fastest growing and some of the largest mobile phone markets in the world. Among these countries, Motorola has substantial presence and market share in China. Developing countries are the growth drivers of mobile phone markets in the future. To take advantage of such growth rate, Motorola should penetrate well in the developing countries. Motorola will have to invest heavily in facilities and marketing efforts for developing countries. Works Cited Adam (2010). Motorola SWOT Analysis. [Online] Available at: http://www.freeswotanalysis.com/telecommunication-companies-swot-analysis/20-motorola-swot-analysis.html [Accessed 2 May 2011] Motorola (2010) Motorola Mobility Annual Report 2010. [Online] Available at: http://files.shareholder.com/downloads/ABEA-58XVPR/1245145542x0x442977/DABB979B-F846-4182-A153-87B36E8EBC6F/2010_Annual_Report_Form_10-K.pdf [Accessed 3 May 2011] Bolaji, Ojo (2010) Motorola posts Q4 profit even as sales decline. [Online] Available at: http://www.eetimes.com/electronics-news/4087203/Motorola-posts-Q4-profit-even-as-sales-decline [Accessed 5 May 2011] Jessica, Twentyman (2011) One Cloud Fits All. [Online] Available at: http://online.wsj.com/article/SB10001424052748704739504576067900865394550.html [Accessed 5 May 2011] Read More