Critical Analysis of Motorola's International Business in China

This report analyzes Motorola's expansion into the Chinese market, focusing on the factors influencing its globalization and market entry strategies. The report utilizes a PEST analysis to examine the political, economic, social, and technological factors that impacted Motorola's decisions. It evaluates the effectiveness of Motorola's entry strategy, including investment transfer, local sourcing, joint ventures, and localization, in achieving its corporate objectives. Furthermore, the report assesses the appropriateness of Motorola's staffing approach for senior management in China in relation to its strategic objectives, considering factors such as the low human development index and the need for skilled employees. The study concludes with insights into Motorola's challenges and successes in the Chinese market.

INTERNATIONAL BUSINESS

ABSTRACT
Starting the business in the international environment is not an easy task. This is because,
the given thing require immense contribution and commitment from the side of management.
However, the absence of given thing will lead to affect the firm respective plan. In addition to
this, for the manager it is also necessary that it must formulate different strategy while getting
entry into the new market. This is because, it is with the help of an effective strategy only
remarkable presence can be marked by the corporation in the respective market. The given report
is based upon the case study of Motorola. In this context, it is analyzed that political, social,
economic and technological are being considered as the major factors which had influenced the
Motorola for performing expansion in Chinese market. In addition to this, the entry strategy
which is being adopted by the corporation had also helped a firm a lot. Here, with the help of
these tactics only cited firm had achieved its corporate tactic in an effectual way. Furthermore,
the strategic objective was also met by Motorola with the help of its staffing approach.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Critically analyzing the relevant factors responsible for the globalization of market and
production in case of Motorola's expansion into China.........................................................1
QUESTION 2...................................................................................................................................5
Critically evaluating how effective Motorola's entry strategy was in achieving its corporate
objective in China...................................................................................................................5
QUESTION 3...................................................................................................................................8
How appropriate Motorola's staffing approach for senior management in China in relation to
its strategic objectives.............................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

ILLUSTRATION INDEX
Illustration 1: PEST analysis............................................................................................................1

INTRODUCTION
International business is an activity which manager adopts wherein they tend to establish
their business in the market which is completely unknown to them. This activity has gained
importance in the today's competitive scenario (Global environment, 2016). This is because, it
provides opportunity to the firms with regard to perform necessary improvement in the existing
market share. The given report is based on the case study of Motorola expansion into China. In
this context, the report will give description about the factors which are responsible for the
globalization. In addition to this, the report will also state the market entry tactics that are being
adopted by Motorola in China. Furthermore, the study will also depict the effectiveness of
Motorola staffing approach.
QUESTION 1
Critically analyzing the relevant factors responsible for the globalization of market and
production in case of Motorola's expansion into China
Number of factors are identified which force firms to be globalized their business and
production activity (de Loura, 2014). The description about the same is given with the respect to
Motorola case study. However, with an aim to get information about the number of factors,
assistance has been taken from the tool such as PEST analysis. The detailed explanation about
the same is depicted in below:
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 Political: It is being regarded as one of the most important factors which attracts firms
towards the specific nation. In this context, it has been seen that while making decision of
expansion, manager of firm always prefers to work in such political environment which is
being proved as very supportive in nature. Furthermore, firms will also like to get
associated with such nation whose government policies will be proved as very effective
and which can be easily abide by the respective international firm (Hohenthal, Johanson
and Johanson, 2014). Thus, it can be said that given factor has played an influential role
in the case of Motorola expansion into China. However, it has been evaluated that it is
not a prominent factor for the given decision of firm, but still it can be counted among the
one of them. In this regard, it has been identified that in the year 1980, government of
China introduced liberal economic policy which provided strength to the China's
economy (BUSINESS ENVIRONMENT IN CHINA: ECONOMIC, POLITICAL, AND
CULTURAL FACTORS, 2016). The step which government of China had taken during
the given year attracted many firms. In addition to this, in the given year government has
only taken efforts with regard to take measures for improving the infrastructure facility of
country. This proved as major step which was being taken by the Chinese government.
Thus, given thing has influenced the manager of Motorola for establishing business in the
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Illustration 1: PEST analysis
(Source: Tolstoy, 2014)

respective market. However, the year in which cited firm decided to the expansion,
Chinese economy had been going through the number of complications. Here, one of the
biggest problems which firm has encountered while getting entry into the respective
market was low human development index in China (Meyer and Thein, 2014). But, still
firm has not lost its faith in the market and has made decision of expanding the operation
of firm in the given market. However, with an aim to raise the given index, varied
training and development programs are being organized by the manager of cited
corporation. In addition to this, legal aspect can also be taken into account while getting
information about the factors which are responsible for the globalization market and
production in case of Motorola expansion into China. The legal system of China is not so
liberalized but it provides support to the global firms. Economical: This is being regarded as a second most important factor which has played
major role in the expansion plan of Motorola in Chinese market. Economic condition of
nation mainly emphasizes upon interest rate, inflation rate and exchange rate that are
prevailing within nation. However, it also gives information about the demographic
structure of nation's population. In this context, it is identified that Chinese market seems
lucrative for the companies because of respective market economic effectiveness.
Manager of Motorola has selected this market for the expansion because of the presence
of varied advantages. In this context, it is analyzed that China is the market where cost of
labor is very low (Patel and et.al., 2014). However, it has also being evident from the
given case study that increasing competition in the market and low cost of production are
being regarded as the two major factors which have influenced Motorola for the
expansion. In addition to this, Due to availability of above factors, firm has decided to
shift its product manufacturing facility to China. Motorola has taken the given advantages
and has achieved significant growth in the respective market in an effective way.
However, it has been evaluated by the Tolstoy (2014) that Chinese economy is becoming
less lucrative as it is losing its advantage of producing product at low cost or prices.
Chinese economy has been going through the given situation because of the presence of
varied factors. It consists of increment in the cost of living and percentage of aging
Chinese population. This may create problem in the future strategic plan of Motorola.
Due to this, in future it will become very difficult for the firm with regard to carry out its
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efforts in terms of selling products of firm at cost effective prices. Thus, given situation
may also hamper the existing market share of cited firm. But, still it is right to say that
economic condition of nation has played an important role in the Motorola's expansion
decision. Social: It can be depicted as one of the important factors. This factor gives description
about the social characteristics of people who live in the specific country. Here, manager
of firm gathers information about the age structure, cultural norms, income distribution
and education among citizens. Thus, on the basis of given information, varied types of
decisions will be taken by them. For some firms, this factor plays a major role for the
expansion (Dong and Liu, 2010). However, for some enterprise, this factor does not have
any importance. This factor is considered by those firms which have such products whose
sales is totally depended upon the specific age group of customers. For example, some
cosmetic firms which produces product for the customers who ages between 16-30 year
has been planning for expansion. Thus, it is interested in terms of gathering the
information about the different type of markets. Then, in the given circumstance they will
prefer to expand their business in the respective market which possesses large number of
above given age group of customers. In addition to this, it has also being identified from
the given case study that Motorola needs support from the young and talented
individuals. This is the major reason behind the expansion of cited firm in the respective
market. However, it has been evaluated that while making decision for expanding
business in the Chinese market, the major hurdle which firm has faced is related to low
human development index ( Griffin, 2010). But, with an aim to improve the same,
manager of cited organization has taken varied major steps. In this context, from the
given case study it is assessed that Motorola has opened its own university in the Chinese
market. This is done by manager with an aim to meet its employee related demands in an
effective manner. Furthermore, through its university, firm raises number of skills among
its employees and thereby, cited corporation plays a significant role in the process of
enhancing competitiveness among the employees in an effectual way.
 Technological: It is another responsible factor for Motorola expansion. In this context, it
is analyzed that the government of China is very supportive when it comes to the
technology. Here, it is assessed that the government makes necessary investment for the
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given practices. Being technology based company, manager of Motorola needed such
market where its manufacturing and product selling operations can be carried out by it in
a smother way. The Chinese market possess all the given characteristics. It is the reason
why the operation of firm has expanded in the given market. Here, by taking help from
the given factor only number of goods and services is being produced by the manager of
Motorola (Demirbas, Patnaik and Shah, 2013). Thus, the given thing has provided benefit
to the corporation in the form of increased profits and sales. Overall, it can be stated that
these four are the major factor for the firm's expansion plan in China. Besides this, there
are varied other factors also which also plays very critical role in the expansion type of
decision. It is related to demand of product in market and characteristics of buyers.
QUESTION 2
Critically evaluating how effective Motorola's entry strategy was in achieving its corporate
objective in China
The effectiveness of the Motorola's market entry strategy is assessed in the task of
achieving its corporate objectives in China. In accordance with the given context, it is assessed
corporate objective of firm is to become the finest electronic company in world. Thus, in the
process of attaining the given objective, manager of cited firm had adopted four point strategy. It
consists of investment transfer, local sourcing, joint venture and localization etc. Thus, these four
can be consider as basic tactic which cited firm manager had adopted in order to get entry into
the particular market (Gibbon, 2014).
The first tactic which Motorola had used was to perform investment in the Chinese
market. The tactic which firm had adopted was effective. This is because, the given effort as
being made by cited firm manager can be consider as a small step which will lead firm towards
the biggest goal. In this regard, it is analyzed that the Motorola corporate strategy was to be
counted among world finest electronic company. Thus, in order to perform the same the firm has
to prepare the portfolio of many products. This is because, through this way cited firm can offer
range of electronics products to its respective buyers. Thus, it can establish its own brand name
in the different sectors. In this regard, from the given case it is assessed that Motorola had made
the investment of 120 million dollar for the purpose to manufacture the products such as
integrated circuits, pagers and cellular phone etc (Levene and Conversi, 2014). However, the
given investment had increased further to 400 million dollar. Here, on doing the given
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investment cited firm had developed other manufacturing plants with an aim to produce the
products such as walki-talki, micro-processor and automotive electronics etc.
However, it has been evaluated that the tactic which firm had adopted was proved as
effective if firm would get equal return from all the investments which had been made by it. But,
if the given thing is being seen in the practical aspect then in the given situation it can be
concluded that there are very few firms function in market which achieve success in all the
products which is being manufactured by them. In this regard, it is assessed from the given case
that Motorola had achieved success in the Chinese market because of its mobile handset only.
Thus, it can be stated that the given product has helped cited firm with regard to perform
significant improvement in the market share in an effectual way (Mackinlay, 2013). Thus, it is
right to said that the given tactic which is being adopted by manager had helped firm in terms of
attaining its corporate objectives in some sort of way. This is because, these all given activities
had helped firm in the process of becoming the finest electronic company in an effectual way.
Furthermore, with an aim to attain the given corporate goal, manager of cited firm had
performed investment in its research and development section. For this regard, it had developed
its own R&D institute. The main aim behind the establishment of this institute is to promote the
innovative and creative thinking. This department had assisted firm with regard to make the
production of distinct and unique innovative products. Thus, the given thing had provided
assistance to the cited corporation with regard to build its unique image in market in an effectual
way.
In addition to this, joint venture is being regarded as another market entry tactic which
cited firm has used in the process of achieving the corporate strategy in China. Joint venture is
the activity in which two or more firm merge their operation and collectively they work on
towards the specific purpose (Joint venture, 2016). It is an effective method as it provides
different type of advantages to the corporation. In this regard, there are elements identified which
include a firm into the list of the finest enterprise. The elements consist of market share, portfolio
of product and yearly sales and profit figure. The manager of Motorola had used the given tactic
in Chinese market wherein it had entered into joint venture contract with 9 Chinese firms. The
firms upon which cited firm had established the agreement has been producing the different type
of products (Maertens, Colen and Swinnen, 2011). Thus, the firm goal to became the finest firm
in world had met in the given phase only. This is because, these firms produces different type of
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products in Chinese market. For example, there were many firms which produces mobile
handset, pagers and smart cards. Thus, with the help of given firms only Motorola has effectively
met the large product portfolio related criteria of the finest firm. Thus, it can be said that the
entry tactic which Motorola had adopted were proved as effective at given particular place.
Furthermore, in order to lead the market, a brand has to showcase its presence in the number of
markets. This particular thing has also being fulfilled by the Motorola with the use of joint
venture type of market entry tactic. For example, by signing agreement with nine different firms,
Motorola has established its presence in all the respective markets where these firms are
operating (Wild, Wild and Han, 2014). For example, some joint venture firm has major share in
Beijing market then in the given condition if Motorola get associated with the respective firm at
that time it can get the opportunity with regard to grab the market share of respective enterprise
in an effectual way. Thus, the given type of thing had helped Motorola with regard to perform
significant improvement in the sales and profitability related condition of organization. Hence, it
can be depicted that the cited firm had met its corporate tactic effectively because of given
market tactic.
However, it has been critically evaluated that the major disadvantage which is being
associated with the joint venture type of activity is possibility of risings firm's future competitor.
This is joint venture type of approach revels the strength and weakness of respective firm. Thus,
in future when agreement get dissolved at that time corporation such as Motorola can face
intense competition from those firms to whom which it has established the joint venture contract.
The given situation was also faced by Motorola and due to this its market share had declined
significantly. Thus, the given tactic had created hurdle in the process of achieving firm tactic in
China. But, the impact of given hurdle was not huge upon Motorola.
In addition to this, sourcing the product locally was another entry tactic of Motorola. In
accordance with the given context, on the bases of analysis of given case it is assessed that the
cited firm had sourced its components from local Chinese supplier (Cavusgil and et.al., 2014).
This thing had helped the cited firm with respect to gain the cost effective advantage in an
effective way. Moreover, in order to carry out the production of the finest quality of electronic
goods and services, the manager of cited enterprise has taken step for conducting the training and
development programs for the supplier. The given thing had enabled the Motorola in terms of
providing the high quality of goods and services to the buyers. Thus, it is through this way only
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Motorola had maintained the satisfaction of its buyers. Thereby, it had also performed necessary
improvements in its sales and profitability related condition in an effectual way. Thus, the given
tactic was also proved as effective in the process of attaining the Motorola corporate tactic in
China (Enderwick, 2013).
In addition to this, management of Motorola had also used localization type of tactic
while getting entry into Chinese market. In this regard, the firm had performed changes in the
activity of managing Chinese employees as per China culture. Thus, by complying with the
given type of activity, cited corporation manager had maintained the motivation of its workers.
Thus, it is through this way only manager had encouraged them with regard to deliver the high
quality of services to the enterprise. Thus, the above mentioned goal had been met by Motorola.
This is because, it has been seen that with an aim to become leader in market a manager of firm
will have to deliver the high quality of services (Dunning, 2013). Hence, it can be depicted that
the market entry strategy which is being used by Motorola was effective. It is due to the fact
that, it had helped firm in the process of attaining its overall corporate tactic in Chinese market in
an effectual way.
QUESTION 3
How appropriate Motorola's staffing approach for senior management in China in relation to its
strategic objectives
It can be assessed that Motorola's is required to undertake effective staffing approach at
the senior management level in China at the time carrying out its expansion acticities in another
market in regard to their strategic objectives. Thus, planning staffing option is one of the crucial
strategic objective so that best results need to be adopted in order to implement appropriate
person at the right place. However, it helps in carrying out desired goals and activities so that
best results can be attained. Further, business also plans to enhance its market share and move
into different market through adopting effective staffing approach and hire efficient people from
Chinese market so that they can be given strategic position within company and thus take best
necessary actions for firm. All these activities assists firm to grow and develop in the new market
and gain positive outcomes (Dent and Whitehead, 2013). On the other hand, Motorola found that
the Chinese managers were not that much familiar with the western management concept and
thus they lack the talent of managing people. For instance, Chinese people were good at basic but
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