Evatuation of the Change in Business Environment over the Last Five Years

THE BUSINESS ENVIRONMENT

AUGUST, 2010
MOTOROLA MOBILE COMPANY
EVATUATION OF THE CHANGE IN BUSINESS ENVIRONMENT OVER THE LAST FIVE YEARS
WORD COUNT: 3126

“EVALUATION OF THE CHANGE IN THE BUSINESS ENVIRONMENT IN MOTOROLA OVER THE LAST FIVE YEARS”.

Table of Contents Executive Summary--------------------------------------------------------------------3
1. Introduction-------------------------------------------------------------------------3
2. Company Description and Background----------------------------------------4
3. Motorola Business Environmental---------------------------------------------5 3.1. Economical Environmental--------------------------------------------------5 3.2. Socio-Cultural and Demographic Environmental-----------------------7 3.3. Technological and Environmental Challenge ----------------------------7
4. Conclusions and Recommendations--------------------------------------------9
5. References and Bibliography----------------------------------------------------10

EXECUTIVE SUMMARY

THE OBJECTIVE OF THE WORK:
The fundamental concept of this work is to know and understand the business environment and its significance for both management students and for the owners and the managers of business organisations. MOTOROLA one of the global communication leaders will be evaluated for its changes and factors effecting its business environment over the last five years. The PESTEL analysis will be conducted to evaluate the environmental factors that have affected the company’s business which led the organisation to make specific strategies. Simultaneously this will also include conclusion and recommendation.

1
INTRODUCTION
Businesses and industries are establishing in agreement with the requirements of the population or the social order. As a rule for any organisations to retain its strong assets, aptitude and aggressiveness, there is a need to instigate a strategy. It is essential that the whole organisation should constantly keep itself open for changes it might stumble upon both inside and outside the environment with the intention to survive and settle with the latest improvement it might experience.

THE BUSINESS ENVIRONMENT
The Business Environment comprises of one or collective forces affecting the organisation which furthermore affects the organisation’s functioning, most important its strategies and execution of decision making (Brooks and Weatherston, 2000).
The Business environment can be categorised into two: 1. THE MICROENVIRONMENT: These factors are in the direct region of an organisation’s operation which affects its freedom of performance and making conclusions for example Customers, Employees, Suppliers, Shareholders, Media and Competitors with whom the company interacts with (Palmer and Hartley, 2006).

2. THE MACROENVIRONMENT: Few factors in the macro-environment show an indirect affect on the decisions of the managers for an organisation. It is a set of factors Political, Economical, Social, Technological, Environmental and Legal. The PESTEL model helps managers to categorise and analyse the macro changes like new laws, tax changes, demographic change, trade barriers and government policies (Palmer and Hartley, 2009).

Taking this into consideration it is important for management students to study the environment and for the managers to examine their business environment for several reasons: Changes in the business environment can affect the marketplace, the technologies involved and employees. Also, understanding the dynamics involved in a business environment, helps generating profitable strategies and plans, as well as assists in understanding possible threats and opportunities that might arise (Brooks and Weatherston, 2000).
A PESTEL analysis can be carried out to analyse the organisation’s present and future upbringing as a part of strategic management process by both management students and as a company’s owner. This technique provides improved knowledge of the macro-environmental factors and consequently is effective for strategic decision making for any business organisation. Following this the organisation can also do SWOT analysis which is generally the assessment of internal ‘strengths’ and ‘weakness’ of an organisation and external ‘opportunities’ and ‘threats’ for the organisation as it assist an organisation in setting up its anticipated objectives (Worthington and Britton, 2009).
The main intension of this assignment work is to examine the macro-environmental factors and implementing PESTEL analysis on the concern factors of a multinational organisation which led an organisation to make strategic changes both internally and externally. Strategic change can facilitate an organisation to grasp the benefits of rising opportunities or to survive through subsequent environment threats (Gioia and Chittipeddi, 1991). The company chosen as a substance of this evaluation is the Motorola Mobile Company. Existing as multinational mobile company involves all the related factors as a business environment perspective, simultaneously the company is going through lots of challenges in the last few years which led organisation to construct new strategies in the direction of maintaining its position in the international bazaar, generating added turnover for the business.
2
COMPANY DESCRIPTION AND BACKGROUND
Motorola Inc. is one of the top American corporation structured in 1928, a multinational company in telecommunications based in Schaumburg, Illinois in Chicago Suburb (Motorola Website, 2010). The company was listed in Fortune 100 in 2008 at 65th rank, is now on 110th rank in Fortune ranking but is at second rank in Industry Network and Other Communications in Equipment with revenue of $ 22063 million (Cnnmoney, 2010). As stated earlier Motorola is a producer of wireless telephone handsets provides best ever experienced technologies, products and services (Motorola Website, 2010). In addition to this Motorola also occupied in designing and selling of wireless network infrastructure apparatus such as cellular transmission base stations and signal amplifiers (Motorola Website, 2010). However, apart from this Motorola also manufactures home and broadcast network equipment include digital video recorders, set-top boxes, and network equipment used to enable video broadcasting, high-definition television, and computer telephony (Motorola Website, 2010). Most of Motorola’s customers are for wireless voice and broadband systems which are employed to build private networks and public safety communications systems like Astro and Dimetra (Motorola Website, 2010). Its dedicated department of handsets concentrates on production of fashionable phones using Google 's open-source Android cellular working technique. On November 2, 2009 Motorola Driod is the first handset released with implementing the latest version of Google 's open source OS, Android 2.0 (Motorola, 2010).
Together with the expansion and strong competition rising in mobile phone industries, will Motorola continue to survive this calamity of crisis?

3
MOTOROLA BUSINESS ENVIRONMENT
As in the past few years Motorola in mobile phone industry, is influenced by several changes in its business environment which has led company for several strategic planning to be enforced in different markets to help business to have a primary understanding for altered markets which might be the possible reason of drastic deterioration in its market share. Imposing different strategies may help the company to understand how the market functions. Also, it further helps to familiarize itself to cultural characteristics of the market. This will educate and to that effect enable the company to deal with various situations in best possible way.
Finally various strategies facilities the company to come across fewer dilemma to switch on to new market. To some extent it is uncomplicated to start business in urbanized countries as in is entirely developed like communication, allocation and transportation compared to developing countries where more bendable method can be implemented. This is due to their lack of infrastructure but proud on national privilege. Even so sales point of view it is relatively extensive. By means of this following is the instance of some of the PESTEL factors been analysis for MOTOROLA.

3.1. ECONOMICAL ENVIRONMENTAL
According to both business and economics cannot be disentangled or escape from each other Worthington and Britton (2009). From 2007-2010 due to fallout of the global market drastically it affects the telecommunication segment, due to which The US as well as The European and the Asian telecommunication manufacturing markets impacted. And due to the fallout of the economy because of recession across the world Motorola could not produce Smartphone’s and compete with Sony Ericsson that is one of the reasons not to attract the customers. On the other hand, unexpected elevation in the ratio of unemployment influences consumer’s behaviour. Therefore, trade in the mobile industry declined remarkably within the sector was of severe concern during fiscal downturn.
For the developed country, cell-phone manufacturers are the tower of strength and a symbol of economic development. Excluding this business, it is unfeasible to expand well-organised cellular company, a computer business and other essential basics of financial trade and industry. The cell-phone business in which Motorola is involved is a focal point of industry, a sole of monetary phenomenon, which dominate the twentieth century (Motorola, 2010).
In fact, it was recorded that nearly $1.2 billion deficit occurred in Q4 2007 (Bartash, 2008). The findings of Bartash, J (2008) further emphasized that the total market share of Motorola was persistently decreasing i.e. from 18.4% of the market in 2007 to 9.7% by 2008. It is now estimating a global market share for handset at 4.7% (Wikinvest, 2010). On the other hand its rival companies expanded their business like Samsung Electronics exceed as world 's 2nd largest mobile company - with an extensive market share in Q1 2008 of 16.4% and by July 2007. Motorola was losing its position from 3rd place by rapid developing South Korean international LG Electronics, which was further exceeded by Sony Ericsson in Q1 2008 with a hard-hitting increase in market share to 8.6% (Smith, 2008).
According to Sramana Mitra Motorola saved $1 billion cost in 2008 from Mobile plans and further decrease in operating cost to $264 million with Q207 and $469 million compared to first six month of 2007. So in spite of low sale company manage to have an operating profit of $82 million which is an increase of $114 million over Q207 (Seekingalpha, 2010).
In a year Motorola planned to get underway five 3G handsets and a total of 34 devices. It looked forward to an earning ranging from $0.0 to $0.02 per share from Q3 for the full year and EPS was presumed between $0.06 and $0.08. At the end of 2007, Motorola assumed net cash of $4.3 billion and traded around $10 with market cap of $23 billion (Seekingalpha, 2010). Note: Interesting read from Business Week: Marcial: Time to Ring up Motorola?
On March 26, 2008, Motorola 's board of directors permitted the split of the company into two different publicly trading companies. The company continued with the plan on separation and announced some important management changes those were that Dr. Sanjay Jha to be Co-CEO of Motorola and CEO of Motorola Mobile Devices businesses and Greg Brown will operate as CEO of Motorola Broadband and Mobility Solution which include Home and Network Mobility Solutions businesses (Seekingalpha, 2010). In the beginning it was assumed to split to be completed by mid-2009 but was delayed due to company reorganization problem and the significant economic scarcity in 2008-2009 (News.cnet, 2010). Motorola finally announced the separation into two separate and independent publicly traded companies on February 11, 2010 (Mediacenter.motorola, 2010).
Though this thump like a very obscure estimation of such a huge monetary phenomenon, the communication business is not at it end. A change in outlook is desired to be achieved for this industry.

3.2. SOCIO-CULTURAL AND DEMOGRAPHIC ENVIRONMENTAL

All organisations survive and functions within society and gets predisposed by various demographic and socio-cultural changes. Both demand and supply side of finance gets affected by demographic changes, social context include goods and service utilization of finance and cultural environment consist of stance, standards, insight, choice and behaviour of society. All these factors influence a change in due course and disturb any business so it needs to be sensitive (Worthington and Britton, 2009).
Telecommunication industry changed the society as a whole. In this context Motorola directly give work to millions of employees but tons of millions indirectly (Motorola, 2010). It has change society by altering the fashions people adopt for living and work (Motorola, 2010). The social value is the value the way society communicates over longer distances easily. The foremost existence is the communication and technology industry being a model of social rules and regulations it now offers a “pillar”. On the other hand, specific social issues are supposed to be tackled in many developing countries, particularly a trace of religious faith.
Above given factors demonstrate view of market segmentation. In 2008, the company was battling ever since launching the new handset Razr which faded its reputation. And more than 4000 employees were made redundant which was plus to more 3000 layoffs (Computerworld, 2010). Despite of making a good mobile for the society which was not accepted by the society directly affected the company’s finance status which further affected society itself. Therefore, demand and supply side was affected so businesses need to be sensitive.

3.3. TECHNOLOGICAL AND ENVIRONMENTAL CHALLANGE
According to Mr. Jeremy Dale, Corporate Vice President, Global Marketing, Motorola Mobile Devices, natural resources, energy and time are more precious these days, so the technology used for product made from design to packaging in partnership with Carbonfund.org, the company wants to be certain and sure that the mobile phone creates its accurate impact on consumers and the environment (Mediacenter.Motorola, 2010).
Motorola has the altitude and multiplicity of technologies that are arranged and organised are rising, which requires both new investment lumber and new but misgiving risks (Motorola, 2010). In the world each week more or less a millions of mobile handsets and other communication tools are manufactured - are the most convoluted product in itself. Motorola is open in contrast with other communication and technology businesses when it comes to global and environment concern. It is involved in manufacturing mobiles and other products extraction of some valuable raw materials. Communication companies like Motorola need to set up R & D centres to take benefits of research infrastructure and human resources to develop products that meet with the requirements of global environment and protection policies more effectively. MOTO W233 (Front lit) On 6th January 2009, Motorola published two new mobile phone MOTO W233 world’s first mobile device made by recycling water bottle plastic and MOTOSURF A3100 touch table with fully customized home screen. This will make social responsibility and social connective easily available to people everywhere (Mediacenter.Motorola, 2010).

MOTO W233 Renew is ecologically reliable design uncompromised quality authorize to reduce carbon footprint made from plastic consist 100 percent recyclable water bottles, is world’s first mobile to reduce carbon footprint. Motorola counterbalance the carbon dioxide required from manufacturing to packaging through investment in renewable energy sources and reforestation in association with Carbonfund.org’s and has been certified as CarbonFree® Product. Renew was intended for eco-conscious customers and also for them whose life’s first priority is a mobile phone. Renew is ranked between 7 to 8 out of 10 in consideration with all the features a mobile handset should have (Mediacenter.Motorola, 2010).

Motorola Recycling Program for Mobile Phones and Accessories

For the environmental responsibility Motorola accepts any sort of mobile or accessory for recycling, which in fact to help environmental friendly and reuse of its material. Some portion of the returned mobile phones issued to the schools to participate Motorola’s Race to recycle program. This program is conducted by the Motorola to cover overall commitment and sustainability (Mediacenter.Motorola Website, 2010).

Motorola uses the cutting edge technology in manufacturing its products and building its services. However, it is observed that there is lot of potential for developing economic sensitivities, intellectual capabilities and coordination skills through electronic technologies. 4 CONCLUSION AND RECOMMONDATIONS Motorola can do better the current scarcity and can be successful in their business of mobile handsets. If it continues to improve and develop exceptional innovation and technology 10 years from now, Motorola can gain its position back. Technology and competitors are the two main factors that have concern with performance of business. Other factor like suppliers too affects it. As a consequence, the company should have wide alternative plan concerning suppliers’ matter.
As it is mention before that the mobile phone industry is one of the “stakes” contributing substantial economic of world businesses. In the coming 10 years, mobile industries will reveal a new invention of mobile phones with superior features that has never seen before. This will be mandatory for the structurization of this high-status industry to become noticeable among media. Reports discloses that there are substantiation increase in the new ‘network age group’ in errand of online services use on multiple devices such as iPods and mobile phones and involved in online inclusion (‘Ofcom Communications Report, 2008).
With respect to this Motorola needs to opt for strategy of internet marketing via websites of gain significant increase in revenue. Motorola needs to draw attention of the customers by emphasising and informing about their assorted products and services and rose significantly use of internet as a powerful marketing gizmo. In addition to this Motorola marketers should pay prior attention towards designing strategy for globalisation calls which ensures that comprehensive and prime market area gets covered has been taken hold of.
As a result of wide variety of alternative available, consumers gets motivated to swap mobile phones, this makes it dominant to use Internet as a vital advertising device for endorsement is an exceptional marketing strategy.
Using Internet as a marketing channel for its products and services is a wise choice. The industry can explore the interface as a branded organisation. An intelligent use of the website could most probably attract existing and potential customers. Therefore, the strategies of the organisation are necessarily to be logical with the predetermined objective of the company. This is very vital in the industry of mobile provision where inventions are an edge.

5 REFERENCE AND BIBILIOGRAPHY

BOOK REFERENCE: * Bartol, K. M. and Martin, D C. (1998) Management, 3rd edition, USA, The McGraw-Hill companies, Inc. * Brooks, I. and Weatherston, J. (2000) The Business Environment: Challenges and Changes, 2nd edition, Harlow, Pearson Education Limited. * Palmer, A. and Hartley, B. (2009) The Business Environment, 6th edition, Berkshire, McGraw-Hill Education. * Worthington, I. and Britton, C. (2009) The Business Environment, 6th edition, Harlow, Pearson Education Limited.

JOURNALS REFERENCE: * Gioia, DA & Chittipeddi, K 1991, “Sense making and sense giving in Strategic change initiation." Strategic Management Journal, vol. 12, pp. 433-448.

WEBSITES REFERENCE: * Bartash, J 2008, Motorola profit sinks on mobile woes. Market Watch. Available at: http://www.marketwatch.com/news/story/motorolas-quarterly-profit-declines-84/story.aspx?guid=%7BCC01CF82%2DC434%2D4C1E%2D97B5%2DFBEF11D78E44%7D&siteid=yhoof [Accessed: 22nd July 2010] * Cnnmoney 2010, Fortune 500. Available at: http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/288.html [Accessed: 22 July 2010] * Computerworld, 2010. Available at: http://www.computerworld.com/s/article/9126025/Motorola_announces_4_000_more_layoffs [30th July 2010]. * Krazit T 2003, Motorola blames phone shortages on camera components. Accessed: May 12, 2008. Available at: http://www.computerweekly.com/Articles/2003/12/08/199121/motorola-blames-phone-shortages-on-camera-components.htm [Accessed: 2nd August 2010]. * Mediacenter.Motorola, 2010, Available at: http://mediacenter.motorola.com/Content/Detail.aspx?ReleaseID=10464&NewsAreaID=2 [Accessed: 30th July 2010]. * Mediacenter.Motorola, 2010, Available at: http://mediacenter.motorola.com/content/Detail.aspx?ReleaseID=11244&NewsAreaID=2 [Accessed: 26th July 2010]. * Motorola 2010, Motorola. Available at: http://en.wikipedia.org/wiki/Motorola [Accessed: 3rd July 2010]. * Motorola Website 2010, Motorola, and Available at: www.motorola.com [Accessed: 9th July 2010]. * News.cnet, 2010. Available at: http://news.cnet.com/8301-1035_3-10078987-94.html [Accessed: 27th July 2010] * Ofcom Communications Report, 2008. Office of Communication. Available at: http://www.ofcom.org.uk/media/news/2006/08/nr_20060810 [Accessed: 2nd August 2010]. * Seekingalpha, 2010. Available at: http://seekingalpha.com/article/91214-motorola-turnaround-in-progress?source=feed [Accessed: 24th July 2010] * Smith T 2008, Q1 post-Xmas lull reverses iPhone growth curve. Available at: http://www.reghardware.co.uk/2008/04/25/q1_world_phone_sales/ [Accessed: 27th July 2010] * Wikinvest, 2010. Available at: http://www.wikinvest.com/stock/Motorola_ (MOT) [Accessed: 24th July 2010]

References: * Bartol, K. M. and Martin, D C. (1998) Management, 3rd edition, USA, The McGraw-Hill companies, Inc. * Brooks, I * Palmer, A. and Hartley, B. (2009) The Business Environment, 6th edition, Berkshire, McGraw-Hill Education. * Worthington, I * Cnnmoney 2010, Fortune 500. Available at: http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/288.html [Accessed: 22 July 2010] * Computerworld, 2010 * Krazit T 2003, Motorola blames phone shortages on camera components. Accessed: May 12, 2008. Available at: http://www.computerweekly.com/Articles/2003/12/08/199121/motorola-blames-phone-shortages-on-camera-components.htm [Accessed: 2nd August 2010]. * Mediacenter.Motorola, 2010, Available at: http://mediacenter.motorola.com/Content/Detail.aspx?ReleaseID=10464&NewsAreaID=2 [Accessed: 30th July 2010]. * Mediacenter.Motorola, 2010, Available at: http://mediacenter.motorola.com/content/Detail.aspx?ReleaseID=11244&NewsAreaID=2 [Accessed: 26th July 2010]. * News.cnet, 2010. Available at: http://news.cnet.com/8301-1035_3-10078987-94.html [Accessed: 27th July 2010] * Ofcom Communications Report, 2008 * Seekingalpha, 2010. Available at: http://seekingalpha.com/article/91214-motorola-turnaround-in-progress?source=feed [Accessed: 24th July 2010] * Smith T 2008, Q1 post-Xmas lull reverses iPhone growth curve * Wikinvest, 2010. Available at: http://www.wikinvest.com/stock/Motorola_ (MOT) [Accessed: 24th July 2010]