Question
Can someone simplify this for me? In 2001, Motorola generated sales of $31,191M with 111,000 employees for a productivity of $0.27M per employee. In contrast,
Can someone simplify this for me?
In 2001, Motorola generated sales of $31,191M with 111,000 employees for a productivity of $0.27M per employee. In contrast, Nokia generated sales of $27,645M with just 53,800 employees, for a productivity of $0.53M per employee - nearly double the productivity of Motorola. Clearly, Motorola has significant costs associated with its level of employment that are not being returned in sales. This is interesting because Motorola, as observed earlier, also has poor fixed asset use in addition to this effective and/or efficient use of human assets. Perhaps contributing to the poor fixed and indirect cost structure is that Motorola has elements of being a conglomerate that most of the other firms in the industry do not have. Motorola is involved in diverse business segments - telecommunications, semiconductors, automotive components, and batteries, to name a few - and must evaluate whether the administrative and infrastructure costs of managing these diverse segments are less than the benefits of having the segments under one corporate umbrella. It is not obvious that the diverse business segments within Motorola are being used synergistically to increase overall value. If there are not synergies between the business segments, Motorola shareholders should prefer that Motorola divest the segments as investors can diversify their portfolios more efficiently than Motorola can. Most of the other firms in the industry do not have to absorb the costs associated with managing such diverse business activities.
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