Industry Analysis Case Study

Motorola in China (A): Dealing with an Evolutionary Industry Life Cycle

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Abstract:
An industry's life cycle runs through four stages: introduction, growth, maturity and decline. In the first stage, companies prompt customers to buy the new product. Then the growth phase sees rapid market expansion and increasing competition, with the entry of new players. In these two phases, a lot of evolution (both in terms of products and markets) happens. Products undergo many changes with the application of new technologies, rising demands and varying choices of consumers. This case study sees how Motorola dealt with such evolution in an emerging market. Motorola was the first to enter the Chinese mobile phone market in 1987. So it was blessed with the First Mover Advantage for nearly 15 years. However, with the evolution of Chinese telecom industry, improvements in mobile networks there and entry of new competitors (local and foreign), Motorola began to lose its market share. But China became a crucial market for Motorola, as its western markets dried up.

Pedagogical Objectives:

• To understand the evolution of China's mobile industry and the operating challenges
• To discuss and analyse strategy formulation in the evolutionary phase of an emerging market
• To discuss whether First Mover Advantage can guarantee success in the long run.

Keywords : Motorola; China Handset Market; Economic reforms in China; Mobile Phones; Motorola and Eastcom; Industry Analysis Case Study; Motorola and Nokia; Centrally planned economy; Industry Life Cycle; Intended Strategies; Emergent Strategies; First Mover Advantage; First Mover Disadvantages; Chinese Guanxi; Chinese Business Environment