EXECUTIVE SUMMARY

The case under study Motorola in China, explains how and why Motorola decided to start its operations in China. The case focuses on the strategies that were devised and implemented to acquire an international recognized presence with a local touch in Chinese markets. The strategies also aimed at increasing the market share and revenues for the organization with lower production costs. Motorola started its operations in China in 1987 by establishing a representative office in Beijing. This was later followed by the opening of its own production plants and joint venture agreements as part of their expansion strategy. Motorola provided various products which included mobile phones, semi-conductors, broadband and digital trunking systems. The company used various strategies which included investments, joint ventures, hiring local staff and developing them through Motorola University and in-house training system and sourcing input components from local Chinese suppliers. Later, when the competition increased and market share declined a 2+3+3 strategy was used in addition to the earlier used strategies. The 2+3+3 strategy produced very desirable results for the company and helped it attain competitive advantage. Now the real challenge ahead of Motorola lies in sustaining this competitive advantage.

MAIN BODY OF THE CASE

Motorolas Chinese venture turned out to be a great success. By 2003, Motorola was the number one foreign investor in China. The company president and the management expresses that China has been one of the very significant market for the company on account of its big size and large potential customers. The company successfully penetrated the Chinese market and turned out to be a market leader in mobile handsets. Over the years Motorola expanded its business in China to various segments, such as personal communication sector (PCS), global telecom solutions sector (GTSS), semiconductor products sector (SPS), commercial, government and industrial solutions sector (CGISS), broadcast communications sector (BCS) and integrated electronics systems sector (IESS). By 2003 when the company was regarded as the most successful Chinese company in China the president attributed this success to their initial four point strategy which involved: 1. Investment/technology transfer: Motorola made two initial investments for setting up their manufacturing plants in China and later established 18 research centers in China. 2. Management localization: The company hired local Chinese to better understand the Chinese market and to expand its market share 3. Local sourcing: The organization started acquiring the components of manufacturing from the local suppliers which reduced their costs of acquiring these parts and also developed good supplier-partner relationships 4. Joint ventures/co-operative projects: Motorola entered into 9 ventures with the local firms to expand its business and increase its profits.

Although this pack of strategies worked well but with the increase in competition in Chinese markets Motorola introduced a supplementary strategy known as 2+3+3 strategy. The aim of this strategy was to make China as the largest manufacturing and research place, increase the sale of its products and generate high returns. The strategy worked very well and was a success to attain the competitive advantage for the company. Despite of certain set backs, the company continued its growth. Now the real challenge ahead lies in sustaining this competitive advantage. The global slump in the semiconductors market badly affected Motorola. Moreover, the launch of 21 new mobile handset models is seen to deeply impact the future of Motorola in China.

RECOMMENDATIONS
Due to the still emerging global importance of China for both the local and foreign investors Motorola needs to more proactive to develop and retain its market share. The environmental scanning needs to be more rigorous so that the appropriate strategies could be formulated and implemented The organization also needs to develop a contingency plan in case its strategies doesnt work as desired