BUSINESS MANAGEMENT:

QUESTION TWO [40 MARKS]

Motorola was the pioneer of mobile phones, and was the top cellular phone company in the world until the late 1990s, when it was overtaken by Nokia. This case discusses some of problems that Motorola faced in 2006-2007, after it failed to follow-up the success of its iconic phone model, the Razor, and was quickly overtaken by competitors who launched innovative products to capture market share. Motorola slashed the prices of most of its phone models in late 2006 to recapture some of the lost market share, drastically affecting its margins in return. In early 2007, Motorola announced that it would make an effort to revive its financial performance and not go behind market share alone.

It also embarked on a business reorganization to better align its operations with its customers and markets. However, it was widely believed that what the company needed was a path breaking new product to pull it out of difficulties. But as of mid-2007, Motorola had no products that looked likely to replicate the Razors success. In addition to this, CEO Ed Zander was losing much of the credibility he had earned in 2004-2005, during his early years at the company, and speculation was rife that Motorola's board might consider replacing him in the near future.

http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/BSTR267.htm

2.1 Motorola had no product to replicate in mid-2007. Explain the meaning of centralisation of authority. Give detailed explanation of the advantages and disadvantages of centralisation of authority in Motorola. (20)

2.2 Briefly discuss any principles of organizing in Motorola. (20)