Motorola's Market Entry and Staffing Strategies in China: A Report

This report provides a comprehensive analysis of Motorola's expansion into the Chinese market. It begins with an examination of strategic tools for globalization, including PEST and Porter's Five Forces analyses, highlighting how Motorola navigated the political, economic, social, and technological landscapes of China. The report then delves into Motorola's market entry strategies, focusing on the Greenfield operation strategy and the four-point strategy, which involved technology transfer, management localization, local sourcing, and joint ventures. Furthermore, the report explores Motorola's staffing approach for senior management, although the specific staffing method (ethnocentric, polycentric, or geocentric) needs further clarification based on the provided text. The analysis incorporates various academic sources, assessing Motorola's successes and challenges in the Chinese market, including competition and market dynamics. The report concludes with key findings regarding Motorola's strategic decisions and their impact on its performance in China.

Motorola in china
1

Table of Contents
INTRODUCTION ...............................................................................................................................4
1 Strategic tools for globalisation of markets and production of Motorola’s expansion into China
.........................................................................................................................................................4
2. Motorola’s entry strategy in achieving their corporate strategy in China....................................7
3. Motorola’s staffing approach for senior management in China ................................................11
Conclusion..........................................................................................................................................13
References..........................................................................................................................................14
2

Illustration Index
Illustration 1: Increasing rate of the Motorola Products.......................................................................9
Illustration 2: Training center of Motorola from 1998 to 2003..........................................................12
3

INTRODUCTION
Some illustrations are missing, I can't find the diagrams, Also in the number three question, you are
required to answer if the applied ethnocentric,, polycentric or geocentric staffing method, I think
they used ethnocentric and polycentric. Please use reference that are not more than 5 years.
Motorola was an multinational telecommunications company of America. The products of
Motorola are tablet computers, mobile phones, smartphones, networking systems, mobile telephone,
infrastructure, etc. In 1987, it established one of its office in Beijing for exporting
telecommunication gear and semiconductors to China. It was one of the leading and most trusted
firm of China at the time of 2002 in the field of telecommunication. It was also largest exporter
from the China- exporting goods. Later its sales and market share declines due to various reasons
such as increasing local competition, etc.
For the present study, given case scenario of Motorola in China is taken into the
consideration. The file consists of critical evaluation of the factors responsible for the globalisation
of market and production, entry strategy of the company in China. Along with this, it also includes
analysis of staffing approach for senior management in China. In the end, conclusion is explained
with the key findings regarding the given case.
1 Strategic tools for globalisation of markets and production of Motorola’s expansion into China
Zhang, S.F., Wang, W.W. and Cui, C.S., 2013.
Globalisation is an umbrella term due to having various dimensions. It refers to the process
with the help of which companies or enterprises can develop their influence globally or can start
their business at global level. Dimensions of the globalisation are economics, political, sociology,
psychology, communications and geography. Each dimension has its own advantages and
disadvantages which are important to keep in mind while developing business internationally
(Ratasuk, Ghosh and Xiao, 2014).
It was an American telecommunication company and for international expansion and
influence it selected China's market in 1987. They further explained that the products of the
company were mobile phones, walkie-talkie, wireless communications equipment, automotive
electronics, etc. There were various issues faced by the company while developing their business in
China such as its cultural environment, social responsibility, ethical perceptions of the people,
different market structure, laws and regulations and technologies of the nation.
Different authors have different views regarding the strategies used by the Motorola for
establishing its business at China. These views with the help of suitable strategic tools are as
4

follows.
PEST analysis:
 Political Factor: Political factor of China regarding the government regulations, laws,
policies, etc is very difficult to manage as firms need to follow both the formal and informal
rules of the nation” In contrast to this, Motorola managed the political environment of China
properly and effectively. There are some legal issues in the China's political environment
such as their are no regulations for the privacy, recognition of digital signatures, consumer
rights and validation contracts. According to this statement, Motorola took benefit of these
issues by making appropriate strategies for increasing its business in the China and for
influencing Chinese people to buy their products. Expansion of Motorola in China was for
utilizing the joint venture partners for implementing the infrastructure for the development
of outlets for its products (Carter, 2014). ). He further said that Joint contracts with China allowed Motorola to expand its business in
the huge Chinese market. Economic Factor: In a study Liu, 2007, has determined that China is continuously trying to
increase its GDP rate by exporting more, increasing potential of the employees, etc” (Liu,
2007). Market structure of China is also different from the America which results to affect
the working style of the Motorola and for making the enterprise a big hit in China, company
uses various strategies such as Four point strategy” Social Factor: Shi, Chertow and Song, 2010, have identified in his research that “Social and
5
Illustration 1: PEST Analysis
Source (PEST Analysis, 2016)

cultural factor of China make its demographics completely change from the other nation's.
Such as population growth and fluctuation in the age distribution of the nation. Another
social factors involve consumer lifestyles, education, religion and emigrations” (Shi,
Chertow and Song, 2010). During, Motorola's expansion in the China's market, people did
not have proper managerial skills and practical knowledge which make enterprise to develop
new strategy for solving this problem. Motorola developed the strategy of on the job and
leadership program training for developing the employees of China (Wu, 2014).
 Technological Factors: Technology of China is advanced and innovative in respect to the
telecommunication industry. China is facing the problem of unsafe and unstable online
payment system which is depressing its citizens. contrast to this, Motorola used latest
technologies for the production of pagers, walkie-talkie, mobile phones, etc and due to this,
people starts liking and trusting the products. Motorola entered into the market of China
because at that time telecommunication was only an idea in the nation. No one was selling
products regarding it (Connolly, 2015). As per the result of the given statement, firm
enjoyed its 10 year of success while selling pagers to the 10 million Chinese people.
Above analysis represents that some factors were in favour of the company whereas some
were not and for making the environment favourable firm appropriately analyse the external factors
of the nation.
Porter's Five force Model:
According to the Chen, 2007, “Porter's Five force model is one of the popular and excellent
model which provide organisations an opportunity to analyse the external environment properly
before enhancing their business at global level” (Chen, 2007). Porter's Five force model for the
Motorola is as follows.
6

 Bargaining Power of Suppliers: Darigan and Post, 2009, have found that “Suppliers of the
raw materials, components, labour and services to the company works as a power for it. The
potential factors are impact of input on the cost, strength of distribution channel, presence of
substitutes, degree of differentiation of inputs, etc” (Darigan and Post, 2009). With respect
to this, Motorola provided training to the local suppliers for improving the standards of
technology and management. This strategy also helped firm in enhancing its productivity
and quality level. Related to this Changming, 2011, has stated that “Bargaining power of the
suppliers was very low for the Motorola as it provided various training to them for the
improvement in their raw materials and many other things” (Changming, 2011). As per the
result, in 2002 Motorola has 176 direct suppliers and 700 indirect suppliers. Bargaining power of customers: Xie, Xiao and Wang, 2011, have said that “Buyers
bargaining power is high if there are various alternatives for them otherwise, their power is
low”(Xie, Xiao and Wang, 2011). With reference to the Motorola Johnston and Bate, 2013,
have found that “In China bargaining power of customers related to the products of
Motorola was low due to its unique and trustworthy products. The honesty, loyalty and
quality of the firm made people to pay without bargaining” (Johnston and Bate, 2013). In
favour to this, Motorola manufactured pagers, semiconductors, etc in the China and due to
the new product and low telephone penetration pagers became a hit. Threat of Substitute Products: Chen, Lan and Zhang, 2012, have explained that
7
Illustration 2: Porter's Five Force Model
Source (Porter's five forces model. 2009)

“Availability of the substitute products in the market works as a threat for any company”
(Chen, Lan and Zhang, 2012). Similarly Hexter and Woetzel, 2013, have found that
“Increasing number of alternatives give customers an opportunity to switch as per their need
and demand” (Hexter and Woetzel, 2013). With respect to these statements. Motorola
enhanced its business in China due to increasing competition and production cost. Threat of
the substitute products was high for the Motorola but technology development and new and
more features of the products made people to prefer them rather than something else. Threat of new entrance: Yang, 2012, has asserted that “New entries in the market increases
competition and decreases profitability and due to this it works as a threat for the existing
companies” (Yang, 2012). With respect to this, the threat of new entrance was high for the
Motorola which later works as a major factor in its decline.
 Competitive Rivalry: Chang and Park, 2012, have concluded that “The intensity of
competitive rivalry is the major determinant for most the companies. The potential factors
involves in it are powerful competitive strategy, degree on transparency, level of advertising
expense, etc” (Chang and Park, 2012.). As per this, the competitors of the Motorola were
Nokia, Ericsson, Lucent and Nortel at that time. In context to it Cooke, 2012, has
determined that “At the time of entry, there was less competition in the field of
telecommunication and due to which Motorola decided to open one of its office at China”
(Cooke, 2012).
Porter's five force model shows that Motorola managed all the factors very effectively and
efficiently. The growth and leading position in 2002 with the increase in the production capacity
shows that decision of expanding business in China was right for the Motorola. This also represents
that, company properly analysed the external environment of the China along with its competition
and after that it took the decision regarding expansion (Qi, Zhao and Zong, 2013).
2. Motorola’s entry strategy in achieving their corporate strategy in China.
In a research Pulcrano, 2013, has found that “Motorola was the first company in China
which introduced concept of mobile communication their. Due to this, firm had enjoyed a very solid
and leading brand position in the market” (Pulcrano, 2013). Entry strategies and their effectiveness
for achieving a good market position in China are described below.
Greenfield Operation Strategy:
“Market structure of the China is emerging and by watching this, Motorola selected the
strategy of Greenfield as its entry strategy” The reason behind selecting this strategy was high-
control entry mode as their were very less number of players in the field of telecommunication and
8

another reason was low investment risk in China as compare to other countries as it reopened its
economy to foreign investment in 1979. As per these statements, Motorola had various benefits
from the business expansion in the China.
“This strategy helped Motorola in making top position in Chinese market and it became most
successful foreign company in China”. “For proper implementation of the strategy, firm managed to
understand cultural, social and political factor of the nation which later result to penetrate its market
with respect to the telecommunication and provided various manufacturing facilities to the firm
within the country”
Four Point Strategy:
Changming, 2011, has said that “Motorola used four point strategy for developing its
business in the field of semiconductor, pager, two way radio and automobile electronics in China”
(Changming, 2011). Similarly Cooke, 2011, has concluded that “In four point strategy four factors
were taken into the consideration by the firm which were 1. investment technology transfer, 2.
management localisation, 3. local sourcing and 4. joint venture co-operative projects” (Cooke,
2011). “Motorola set up a plant at the overall cost of $120 million in Tiajin for the economic and
technology development in the field of pagers” In favour of this Yang, 2012, has asserted that
“Company entered in to the 9 joint ventures with the companies of the China for expanding its
presence in the market and for increasing the production. With the help of this joint venture, firm
developed pagers, smart cards and mobile handsets. As per the result, these joint ventures helped
company in increasing its savings” (Yang, 2012). In contrast to it Pulcrano, 2013, has argued that
“Four point strategy made Motorola to invest in research and development sector. As per the result,
company established a R&D centre in Beijing, China which was focused on the development of the
technologies with innovations and creativeness” (Pulcrano, 2013).
The above figure shows the growth of Motorola's products while 1995 to 2000 with the help
9
Illustration 3: Increasing rate of the Motorola Products
Source (Wang and et.al., 2010)

of four point strategy.
With respect to the above statements Chen and Vang, 2008, have stated that “Under four
point strategy, Motorola developed a production procedure lab , an analytical lab and software labs
for the development of the new technologies for making China a hub of high technology
manufacturing” (Chen and Vang, 2008). On the other hand Von Zedtwitz, 2004, has given more
emphasis to the customers and said that “Motorola effectively understood the perception and social
life of the Chinese people for making them to buy its products. As telecommunication was new
technique for the people so they got influenced easily and effectively” (Von Zedtwitz, 2004). In
context to this Makos, 2015, has asserted that “Loyalty, trust, technology and quality of the
Motorola products made people to purchase them even on premium prices” (Makos, J., 2015).
Marketing Strategy:
Wang and et.al., 2010, have concluded that “Marketing strategies plays important and
crucial role in influencing people to increase the sales by purchasing products. These strategies
results to aware customers about the new products and technologies which make them to buy their
for improving their living standard” (Wang and et.al., 2010). With respect to the Motorola Chang
and Park, 2012, have demonstrated that “Marketing strategies used by the company were effective,
innovative and creative which influenced Chinese people to give their emphasis on its products”
(Chang and Park, 2012). In favour to this Hexter and Woetzel, 2013, have examined that “Due to
the expensive marketing of the products with the proper information and quality, people did not
mind paying high prices for its products such as pagers, semiconductors and many more” (Hexter
and Woetzel, 2013).
On the other hand Low and Johnston, 2008, have explained that “For making a good brand
image among the customers, Motorola installed glow signs in the areas of the busy market and
placed various advertisements with respect to the products in print format” (Low and Johnston,
2008). They further added that firm also used television advertisements for increasing the awareness
about its range of products among the people. With reference to the innovative marketing strategy
Company opened unique and exclusive showrooms in the upmarket areas for offering latest mobile
phones to the masses. This showroom resulted to attract number of customers towards it and
provided them a specific retailing experience” They further explained that as per the result of this
marketing strategy, service users started spending their time in the showrooms and started using
various technological gadgets without spending any money on them.
“The concept of showrooms was not for increasing the sales and number of customers. It was for
enhancing the awareness among the people about the new gadgets and technologies. This strategy
emotionally connected service users to the company and its technologies”. “Motorola Towns were
10

opened by the company for providing information about the products and for taking feedbacks from
the customers. This made people to present their honest and true beliefs regarding the products with
the areas of improvement”
Localisation Strategy:
“After proper analysis of the external environment, Motorola came to know that customer
preferences of Chinese market is different from the market of U.S.” They further added that after
the poor performance of pure global strategy, company decided to meet the demand of the
consumers from the local market of the China. “As per this strategy, company started local sourcing
and due to this, it provided training to the suppliers for improving their management and
technologies. This brought three benefits for the company which are: lowering the cost of
manufacturing, reducing the risks from the currency fluctuation and catering to the requirements of
the Chinese government” . Similarly Shi, Chertow and Song, 2010, have said that “As per the
results of localisation strategy, firm created very strong and honest relationship with large number
of suppliers. This made business to import 65% of components and to purchase 69% of components
from the local market ” (Shi, Chertow and Song, 2010).
“Localisation strategy of the Motorola resulted to increase employment in China. As per
this, company hired Chinese people for the various posts and also provided various training such as
leadership program and on the job training to them” “Training to the employees and suppliers
resulted to make good and reputed image of the firm. This also helped a lot in taking enterprise to
the top position in Chinese market”
Strategy for Corporate Social Responsibility (CSR):
Darigan and Post, 2009, have stated that “CSR activities help companies in building a good
and reputed image among the people, society and nation” (Darigan and Post, 2009). As per this
statement Hexter and Woetzel, 2013, have said that “Motorola used Project Hope named activity for
the development and welfare of the Chinese society. The aim of this activity was spreading the
primary education in rural areas” (Hexter and Woetzel, 2013).In context to this Chang and Park,
2012, have explained that “Under the Project Hope, company donated wide amount of money and
opened many schools with the name Motorola Hope School” (Chang and Park, 2012.). They
further added that firm donated various teaching equipments to the schools along with the teachers
for the development of the rural students. This strategy helped a lot in making a good and loyal
image of the firm in front of the world. This strategy resulted to increase the trust and loyalty of the
customers towards the products and technologies of the Motorola (Market Strategy- Motorola,
2009).
On the other hand Pulcrano, 2013, has demonstrated that “Motorola organised the program
11

of Green China for protecting the environment from various kind of pollution” (Pulcrano, 2013).
Similarly Johnston and Bate, 2013, have explained that “Under the Green China program, firm
grew many plants and trees, started recycling its products, etc. This helped in creating safe and
healthy environment in the nation” (Johnston and Bate, 2013). All these activities regarding the
social welfare and development, made company to get a huge recognition at international level. It
helped to develop and improve the lives of many Chinese children and people. As per the results, In
2000, Motorola was the leading company in the field of mobile handsets with the market share of
31%.
3. Motorola’s staffing approach for senior management in China
The objective of Motorola was to expand its business in China and to get leading position in
the market by developing new technologies and products. At the time of huge competition,
company faced exodus at senior level management. One of its senior employee Chen left the
company for joining Microsoft in 2003. And it was considered as a very big and major loss for the
growth and development of the firm. Chen was one of the talented and popular senior among the
partners, distributors and suppliers of the Motorola. For solving this issue, company developed
staffing approach for the senior management in the China. Employees of the nation were lacking
proper managerial skills and practical knowledge for developing and improving these skills, firms
started conducting training programs to them (Motorola in China, 2016).
It opened a Motorola University in 1933 to train the Chinese people with the mission to train
and develop world-class staff. It started various training programs such as China Accelerated
Management Program (CAMP), leadership program, etc. As per CAMP,there were classroom
training to the employees for 6 weeks and 14 month on the job training in which action learning,
project management, coaching and employee rotation were included. The syllabus was effective
which contained value creation, business process design, presentation style, benchmarking, team
work, etc. This training program helped Motorola in getting talented and skilled employees who
contributed themselves for the success and growth of the firm. It also helped in increasing the
market share of the enterprise in the China (Wang and et.al., 2010).
12