Technology / Motorola'S Market Share
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Autor: anton 06 November 2010
Words: 993 | Pages: 4
Companies are always looking for ways to produce more revenue. Whether it is reaching out to different demographics or entering new product markets, entities are always planning that next step to succeed. Even if they hold a great amount of market share, their focus is always to predict the next hot item. An article in Business 2.0 discusses Motorolaâ€™s Chief Technology Officer, Padmasree Warrior, and her next plan of attack for Motorola. The popular Razr cell phone has been and still is a huge revenue booster for Motorola, but Warrior does not want to dwell on the success; she is thinking about the next big act. The article was a great example of how Porterâ€™s â€˜Five Forcesâ€™ can be applied in new product development and gaining market share overseas (where Motorola is not always the leader).
The article is a good example of some of the forces Porter developed. Motorola is fighting for market share in certain countries with Nokia. Gaining market share requires strategy, and these forces can help Warrior shape Motorolaâ€™s strategy. The article talked about the rivalry of Nokia in countries such as India and how Motorola is actually behind in market share. The intense rivalry between cell phone companies gives more power to buyers. The goal for Warrior is to invent its way into the overseas market by creating cell phones that tailor to the specific culture of countries overseas. The consolidated cell phone industry leads to competitive interdependence between cell phone companies, where Motorolaâ€™s new Wi-Max plans will quickly cause other large cell phone companies to give their consumers broadband everywhere. Warrior has her expertsâ€™ blog different ideas for phones as a means for new ideas that could potentially be the next innovative cell phone for Motorola. This approach has led them to create innovative ideas to tailor customer needs like the Wi-Max (broadband everywhere) future plan.
The low risk of entry established in the cell phone industry allows Motorola and the other big names to focus more on product development. Warrior has her expertsâ€™ debate different ideas to see if they can hold their ground and possibly be funded. By creating these innovated ideas they will be able to worry less about substitutes because they are actually creating the substitutes. The cordless phone is not quite the substitute it used to be. The convenient brand identity image that Motorola has makes it harder for smaller unknown cell phone companies to enter the industry.
One of the main problems for Motorola is the overseas cell phone sales. The bargaining power of buyers is high because they expect a cell phone that can tailor to their needs. Whether it is price or performance, they have the power to choose the brand of cell phone that best fits their needs. A lot of cultures, such as China, expect innovation and top-notch products. The article points out the newly released phone in China called â€œThe Mingâ€ that has an electrophoretic screen that you can view easily in broad daylight. The more innovation achieved by Motorola will increase barriers such as brand loyalty for them and scare other companies from entering this market. Motorola predicts that the Internet on cell phones will be the next big move to make, but there are still a lot of problems that need to be addressed. Motorola has invested a lot of money into funding the new Wi-Max. This will give customers an internet connection wherever they go. This Wi-Max approach could potentially create more substitutes for cell phones, such as laptop computers, if the Internet connectivity is readily available everywhere. This also opens the gates for other companies that specialize in Wi-Max to drain money from the cell phone industry.
The article shows how Porterâ€™s â€˜five forcesâ€™ can influence a companies decision to penetrate foreign markets. Warrior had to be aware of every factor in her industry. Who Motorola is up against, how much power the buyers have, similar substitutes for their products, and barriers to entry such as brand identity for Motorola all help Warrior in developing strategies for their cell phones overseas. Warrior is basing her strategy on local needs for the countries culture. The newly released Ming discussed above is a great example of this. The phone not only reads hand written Chinese characters, 13,000 of them, but also has a built in business card scanner. Both of these options are very important for the Chinese culture. The article demonstrates the strategies companiesâ€™ need to develop if the buyers hold a lot of power. If theyâ€™re not happy with the look or if it doesnâ€™t have a feature they need buyers will generally move on to the next cell phone that has what they want. Warrior stated that 4.5 billion of the worldâ€™s population isnâ€™t connected into the cell phone industry. Their focus for the unconnected is on cheap, low-cost phones to give these people an incentive to purchase one and become connected. Product differentiation can help with the power of buyers by giving the cell phone value to the customer.
The article is an interview with Warrior about what Motorola is planning to accomplish in the future, what problems they are having, and how they plan to execute their newest strategy. While developing their cell phones for overseas markets, Warrior and the rest of Motorola have to analyze their industry through Porterâ€™s â€˜five forcesâ€™ to create and implement a strategy to increase revenue for them. They know about the numerous people out there that are not connected and count them as potential sales. By analyzing the industry through the five forces, Warrior is able to create innovative strategies that modify their industry.
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