Motorola Case Study
Motorola was involved in Russia and faced some problems with Glasnost and the decline
of the country. At that time, the founder of the company, Galvin, realized that there was no
future in Russia and declared that China was the country where the growth was to be.
Consequently, Motorola established its first representative office in China in 1987 and has
grown very quickly ever since. Today, China generates more than 10 per cent of Motorola’s
sales and the company has its major businesses in China. Motorola has found that
modernization in China happens quickly and all their competitors are present in the
country. They still predict China to be the potential leader in Asia for their business. The
customers also have high expectations of the products Motorola is offering, because the
products are regarded as being very expensive. However, the problem the company is
facing in China is that the company is growing too quickly, or as expressed another way:
… it is like chasing a speeding train and trying to catch up with it. Presently, Motorola has
12 000 employees and 200 expatriates in China, where the goal is that Chinese successors
will take over the jobs of the expatriates. The expatriates are sent out on assignments for
two to three years, with the possibility of renewal with a one–two Case 1 ABB in China,
1998 C-25 rotation, but limited to a maximum of six years as an expatriate. High demands
are set on the expatriates, especially concerning the difficulties experienced in teaching
teamwork to local employees. This is very important within the company, since all the
strategy planning is done in teams. When the contract time for the expatriate has expired,
the following is expressed: You have done your job when the time comes and you have left
the company and everything is working smoothly, but if everything is falling apart, you are
a failure as an expatriate and have not taught a successor. However, progress has been

made in developing the company’s local employees. Motorola has set up training abroad.
The training, nevertheless, is preferably held within China, with rotation assignments and
training at Motorola University. This company university was set up in 1994 when the
company found that the Chinese universities did not turn out sufficiently well-trained
students.
Within the company, there is, however, a requirement that every employee worldwide shall
have at least 40 hours of training, which is exceeded in China. There must be a combination
of good training and mentor development. Motorola admits that it does not provide enough
training for foreign expatriates before they come to China. You get more understanding if
you look like a foreigner and make some mistakes than if you don’t. Overseas Chinese are
measured through other standards than other foreigners. Some expatriates just cannot
handle the situation in China. If an expatriate fails, it has to be handled with care, otherwise
the person loses face when coming back to the home office. The company also has pointed
out that it needs expatriates with 10–15 years of experience in order to teach the local
employees the company values and to transfer company knowledge. However, the people
that are willing to change addresses and move to China are the younger employees with
less than five years’ experience. The expatriates are often responsible for transferring
technology knowledge and helping to start projects, especially the newly set-up Center of
Excellence in Tianjin, where US$750 million was invested. This was Motorola’s first
manufacturing research laboratory outside the United States. The company has invested
US$1.1 billion in China and has plans to invest another US$1–1.5 million. Motorola has
also set up two branches of worldwide training universities to educate customers, suppliers
and government officials, as well as its own employees. The invested money in China is
from the earnings within the whole enterprise, with the motivation that the Chinese market
is going to be huge. Sincere commitment has been made and the present CEO, Gary Tucker,
expressed the following: When Motorola has come to your country they never leave ... We
manufacture in China, because this is where our market is. We get wealth by going to a lot
of countries around the world and then doing well in that country. The expansion strategy

in China is through joint ventures. However, it is important that the Chinese partners bring
something of value, which means that the partners have to be approved by the CEO. The
company has become ‘so decentralized that it has become bad’, and it desires to reorganize
more along customer than product lines.
A practical reorganization has taken place to move everybody operating in Beijing to the
same newly built headquarters. However, entrepreneurial activities are also of importance,
but difficult, due to financial motivation and autonomy. In China, the products are localized
with Chinese characters on the cellular phones and pagers. In 1987, Motorola started selling
pagers and thought there would not be a big market because the telephone-net was not well
established. The company invented codebooks, which enabled two-way communication.
Fortunately, this also worked in Hong Kong, Singapore and Taiwan. After five years of
operation in China, the company does not have deep roots in the market. Motorola has
invested huge sums in sponsoring environmental protection, providing scholarships to
students, building labs at universities, and donating money to primary schools in rural
areas. The worldwide organization is a ‘pyramid’, with the corporate office on top and
business units underneath – ‘then put the apex at the bottom’. The corporate office works
as the glue that holds the organization together. In 1997, Motorola conducted a
reorganization to better reflect the global nature of the business. The coordinat ion is
safeguarded by this new formal structure. However, the informal information flow is better,
but it is overused. The information flow is mostly through e-mails. A manager gets
approximately 70–100 e-mails a day, of which less than 30 per cent are really Case 1 ABB
in China, 1998 C-26 useful. Regarding communication, the following was expressed: Some
days it feels like we have all these opportunities and we do not really communicate. All the
controllers or general managers in the joint ventures get together quarterly to solve
problems and to counsel and support each other. Information is encouraged, but no system
is developed to track what is going on in all the six districts in China where the company
is operating.

Competition between the different units is a common problem Motorola is experiencing,
which results in the customers becoming confused. This is a problem that has no solution,
due to the matrix organization: We do not have the answers, because if we are too
centralized then we miss new opportunities. How do you encourage creativity and yet keep
people from competing with each other? What makes Motorola a worldwide company is a
set of key common beliefs or guiding principles from the role model and father figure of
the company, Galvin: ‘Uncompromising integrity and constant respect for people – that is
what makes us Motorola.’ This is the principal code of conduct that Motorola practices,
and which the management has to reread and sign every two years. Motorola notes that it
‘obviously’ has to change because it is operating in the Chinese market – for example,
show face, build relations and go to ceremonial meetings. It is essential that the partner is
reliable, that the business makes sense and that it is legal. However, Motorola always looks
the same all over the world, but it is the expatriates and their families who have made an
effort to adapt to the surrounding changes.
China is very difficult for a company like Motorola … because they would like to control
the system and everything takes a long time because they will make sure that you are not
cheating. You must be able to work with all the people that come from different
departments and to let them trust you. Ordinary things like getting water, electricity, etc.,
is a huge problem. Doing business in the Chinese system is a challenge and therefore
creates pressure because you get frustrated.
Question 1
Discuss the Strategic planning of Motorola as per the above case study. (20 marks)
Question 2
How has mentoring helped Motorola to become a viable company in a competitive and
ever changing business environment? (10 marks)
Question 3
Motorola adopted a reorganization as a competitive strategy, give the advantages and
disadvantages of this particular strategy in a global business setting. (20 marks)
Question 4
How has Motorola dealt with competition to have an edge over its competitors?
(10 marks)
Question 5
Critically discuss the various challenges that faced Motorola in doing business in China
and how they overcame such challenges. (20 marks)
Question 6
Utilization of human resource in an organization has been viewed as a major driver for any
organizational strategy. Explain how Motorola utilize expatriates as a competitive drive
strategy. (10 marks)
Question 7
Analyze how Motorola ensured operational efficiency to make it in the global business
environment. (10 marks)